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Cross/JPY Underpinned Ahead Of Ueda Nomination & US CPI

  • The Japanese Yen is set to post standout losses on Monday with the currency weaker against all others in G10 just a few days out from the formal nomination of Ueda as the new BoJ governor. His nomination is expected to be presented to parliament tomorrow.
  • Firmer sentiment in equity markets this afternoon has lent further support to cross/JPY, with notable advances of around 1.5% for the likes of AUDJPY, NZDJPY and GBPJPY.
  • With the reversal of JPY sentiment in late 2022 closely linked to the turnaround for US headline inflation, today’s move could detect some trepidation for currency traders over tomorrow’s key US CPI figures.
  • Brothers Harriman & Co. noted that recent data has confirmed their belief that markets had gotten too complacent about inflation and that the battle is far from over. On the other hand, analysts at TD believe that even on a higher US CPI print, they would expect short-lived USD rallies amid lower cross-asset volatility, a more resilient global economy and soft-landing narrative.
  • USDJPY has briefly traded above the 50-day EMA, at 132.77, an average that represents a key short-term level. A sustained break is required to suggest scope for an extension higher that would expose 134.77, the Jan 6 high.
  • In EURJPY, attention is on 142.99,the Feb 6 high, where a break would confirm a continuation of the recovery that started on Jan 3.

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