Another Fresh ’23 High For USD/JPY, As Markets Shrug Off Kanda’s Warnings

Comments from the top Japanese FX official, Kanda, failed to boost volumes in Asia-Pac hours, with the well-documented raft of impending event risk keeping volumes in USD/JPY in line with the recent averages (per several trading desks).

• USD/JPY showed to a fresh YtD high above Y148.00 in early London hours, with Kanda’s warnings failing to provide a meaningful impact. Spot deals at Y148.10 last, after basing at Y147.69 in early Tokyo trade.
• A quick reminder that Kanda warned that the relevant Japanese authorities are watching FX markets with urgency, stressing that they will take appropriate steps if required.
• Pre-Kanda, we saw U.S. Tsy Secretary Yellen note that she understands the potential need to smooth out JPY volatility, in what was deemed a tacit approval of any required intervention on the part of the Japanese authorities.
• Still, intervention has not been forthcoming as of yet, with desks flagging the risk of such steps if we breach Y150.00.
• Technically, the USD/JPY trend needle continues to point north and the pair is holding on to its recent gains. The focus is on a climb towards Y148.40 next, the Nov 4 2022 high. Moving average studies remain in bull mode position, highlighting the market's positive sentiment. On the downside, Y144.45 represents key short-term support, the Sep 1 low. Initial firm support lies at Y145.91, the Sep 11 low.