Japanese exports grew 9.8% in February, falling short of estimates for a 12.4% increase.
Bank of Japan policymakers had hoped a export number would help cushion an upcoming sales tax hike next month that could hinder economic activity, but weakness in both China and U.S. economies deterred spending on Japanese products.
With the release of the latest export figure, some Japanese officials now see additional stimulus as an option.
Although that may not come to fruition, the discussion is sure to bring the yen lower against its foreign trading partners.
Alongside speculation about more Japanese stimulus, the potential for tighter U.S. monetary policy could bring the yen down from its intermediate uptrend.
Janet Yellen, Federal Reserve chairwoman, is set to release the central bank's March policy decision on Wednesday, with many traders already pricing in a $10 billion reduction of bond purchases.
Although a stimulus cut is priced into trading, forward guidance from Yellen regarding when she believes the central bank will raise interest rates is sure to be the focus of the market.
The unemployment rate is fast approaching its target at 6.5%, and with many economists writing off the past few months of bad data to weather, policymakers may elect to move up the date of interest rate hikes.
Yellen's economic assessment is sure to affect the relationship between the CurrencyShares Japanese Yen Trust and the PowerShares DB US Dollar Index Bullish (UUP) over the next few months.
Lastly, the so-called "fear trade," involving buying yen due to anxiety over the conflict in Ukraine, looks to be easing.
Russian President Vladimir Putin said Tuesday he did not plan to take over other regions of Ukraine, one day after Crimean citizens voted to become part of the Russian Federation.
SPDR S&P 500 (SPY) posted a strong comeback on the news after last week's panic sell, believing now that the elevated tension between NATO countries and Russia will not spark a war.
The current global environment is shaping up for a weaker yen, which could lead traders to start selling as the currency approaches its February highs.
FXY data by YCharts
At the time of publication, the author had no position in any of the funds mentioned.
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.