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Early 150.00 Breach Has No Follow Through, BoJ Reportedly Considering Further YCC Tweaks

JPY

Early Monday Asia Pac trade saw USD/JPY breach the 150.00 handle. The pair got to a high of 150.11, but we now sit lower, last near 149.85. This is slightly down on Friday closing levels for the pair. Post the Asia close on Friday the pair stuck to familiar ranges, with dips sub 149.80 supported, but the 150.00 level remained intact.

  • Early yen weakness came after fresh verbal jawboning from FinMin Suzuki on Friday that FX markets should reflect fundamentals. US-JP yield differentials remain skewed higher, but finished last week sub recent highs (10yr swap spread near +350bps).
  • Over the weekend, the Nikkei reported that the BoJ may consider further tweaking its YCC settings, with the topic set to be discussed at the upcoming BoJ policy meeting at the end of this month (see this BBG link for more details). 10yr JGB yields finished last week near recent highs (0.84%).
  • The local data calendar is empty today, with preliminary PMI prints for October out tomorrow.
  • Over the weekend, the ruling LDP party lost an upper house seat in a by-election. The results of another by-election in a lower house seat are unclear at this stage (see this BBG link). This may prompt further policy tweaks from PM Kishida, with tax cuts under consideration.
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