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FOREX: Japanese Yen Surges Following Tokyo CPI, Ueda Provides Late Boost

FOREX
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  • The majority of the Friday action in currency markets occurred overnight and were centred around significant Japanese yen strength, following the Tokyo CPI data coming in higher than expectations.
  • Narrowing rate expectations prompted a near 200pip move for USDJPY, potentially exacerbated by lower liquidity amid the US Thanksgiving holiday. This tipped the pair to new pullback lows of 149.54, well within range of support at 149.09, the Oct 21 low. It's the upcoming Tankan survey that we see as key for the BoJ's bias into December. The release is due on December 12th, just one week before the last BoJ decision of the year.
  • USDJPY recovered back above the 150 handle ahead of the month-end WMR fix, and extended back towards 150.50 ahead of the close. Late headlines from BOJ’s Ueda on further Yen weakness being a big risk sent USDJPY briefly back below 150.00, keeping volatility for the Japanese currency a key theme for FX market participants. The USD index is just moderately lower on Friday, however ranges for major pairs in G10 remained relatively contained with NZD outperforming, up 0.4%.
  • USDCAD has fully reversed the increase seen after Canadian GDP data indicated disappointing momentum heading into Q4, with October tracking at ~0.8% annualized vs the BoC forecast of 2.0% for Q4. It’s currently at 1.4010 having pulled back from a high of 1.4046 following the data.
  • In emerging markets, USDBRL rose to another fresh record high of 6.1153 before a plethora of government and BCB officials calmed markets, prompting a near 2% pull lower to track closer to unchanged levels on the session.
  • Aussie retail sales and US ISM manufacturing PMI kicks the data calendar off next week, with the clear focus on the year’s final US employment report on Friday.
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  • The majority of the Friday action in currency markets occurred overnight and were centred around significant Japanese yen strength, following the Tokyo CPI data coming in higher than expectations.
  • Narrowing rate expectations prompted a near 200pip move for USDJPY, potentially exacerbated by lower liquidity amid the US Thanksgiving holiday. This tipped the pair to new pullback lows of 149.54, well within range of support at 149.09, the Oct 21 low. It's the upcoming Tankan survey that we see as key for the BoJ's bias into December. The release is due on December 12th, just one week before the last BoJ decision of the year.
  • USDJPY recovered back above the 150 handle ahead of the month-end WMR fix, and extended back towards 150.50 ahead of the close. Late headlines from BOJ’s Ueda on further Yen weakness being a big risk sent USDJPY briefly back below 150.00, keeping volatility for the Japanese currency a key theme for FX market participants. The USD index is just moderately lower on Friday, however ranges for major pairs in G10 remained relatively contained with NZD outperforming, up 0.4%.
  • USDCAD has fully reversed the increase seen after Canadian GDP data indicated disappointing momentum heading into Q4, with October tracking at ~0.8% annualized vs the BoC forecast of 2.0% for Q4. It’s currently at 1.4010 having pulled back from a high of 1.4046 following the data.
  • In emerging markets, USDBRL rose to another fresh record high of 6.1153 before a plethora of government and BCB officials calmed markets, prompting a near 2% pull lower to track closer to unchanged levels on the session.
  • Aussie retail sales and US ISM manufacturing PMI kicks the data calendar off next week, with the clear focus on the year’s final US employment report on Friday.