Citi Weigh In On Early Friday Flows & Near-Term Outlook

Ahead of NY hours Citi note that “it's a long weekend in Japan. Headline risk is almost guaranteed, with BoJ Governor Ueda heading to the G20 meeting on Saturday. More media speculation on the BoJ path is also likely.”

• “USD/JPY tested as low as Y137.25 in the overnight session, helped by BoJ media speculation. Before tactical profit taking ahead of key levels and pre-weekend consolidation.”
• “U.S. Tsys also provide some support for USD/JPY and will continue to be a key driver.”
• “Our options desk has seen a fair amount of USD/JPY downside unwinds (understandably) but some leveraged names who still want skin in the game have rolled their low strikes lower or transformed positions into put spreads.”
• “From here it feels like if July’s BoJ doesn't provide anything then we're in for quite an aggressive retracement in spot (if it hasn't already happened before then).”