Back Sub 156.00, Focus On Potential Curb In Bond Buying At Week's BoJ Meeting

USD/JPY tracks near 155.65 in early Friday dealings. The yen gained just over 0.30% for Thursday's session, amidst broader USD losses, although the yen and CHF were the top performers in the G10 FX space. USD/JPY drew selling interest on moves into the 156.40/50 region.

• The EUR/USD was stronger as the ECB cut rates as expected but raised its price outlook and left uncertainty around the timing of further moves. This lent some modest pressure on the USD more broadly.
• US yields finished up a touch, but we remain close to lows for the week. US initial jobless claims ticked up more than forecast. US-JP yield differentials sit up slightly from recent lows. JGB yields finished lower yesterday (10yr JGB yield to 0.964% off 5bps) amid somewhat dovish BoJ speak and a strong 30yr bond auction.
• Still, more than half of the economists surveyed by Bloomberg see a cut in the BoJ's bond buying program at next week's policy meeting (see this link). From our Tokyo policy team, see this link for the latest thinking on such risks. Only 1 economist surveyed by Bloomberg sees a rate hike next week.
• Note today we have BoJ bond buying ops. Data for April household spending is out, later on April preliminary coincident and leading indices are out.
• On the FX tech side, Wednesday's move higher means that for now, the key support zone, between 154.72, the 50-day EMA, and 154.17, a trendline drawn from the Dec 28 low, remains in place. A clear break of this key zone would be bearish and highlight a stronger reversal. For bulls, a move above 157.71, the May 29 high, would resume a short-term uptrend.