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FOREX: JPY Weaker Against All Others, But Intervention Risk Minimal For Now

FOREX
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  • JPY is weaker against all others in G10, triggered by the break of the weekly high in USD/JPY, for a show above Y155.00. US rates markets remain the key trigger here, with the 2yr US yield well within range of 4.4076%, the 200-dma.
  • BoJ policy and the FX approach of the Japanese authorities becomes key here, with markets re-entering levels at which the Japanese authorities intervened in currency markets via JPY buying, however given the sharp gyrations in short-end US rates markets, it's unlikely recent price action meets the criteria for intervention.
  • CHF trades similarly poorly, however ranges remain contained in EUR/CHF which, given the single currency's acute weakness in recent weeks, may suggest markets view the Swiss economy as facing similar growth risks relative to the Eurozone in the years ahead.
  • Focus for the session ahead turns to US inflation, with markets looking to gauge inflation momentum headed into the inauguration of President-Elect Trump in January. With Trump's government likely to adopt a pro-inflationary policy mix, Fed pricing remains a key focus - particularly as ECB-Fed implied policy rate differentials continue to blow wider.
  • Outside of the US CPI print, appearances from Fed's Kashkari, Williams, Logan, Musalem and Schmid are due, which should keep US monetary policy a key focus Wednesday.
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  • JPY is weaker against all others in G10, triggered by the break of the weekly high in USD/JPY, for a show above Y155.00. US rates markets remain the key trigger here, with the 2yr US yield well within range of 4.4076%, the 200-dma.
  • BoJ policy and the FX approach of the Japanese authorities becomes key here, with markets re-entering levels at which the Japanese authorities intervened in currency markets via JPY buying, however given the sharp gyrations in short-end US rates markets, it's unlikely recent price action meets the criteria for intervention.
  • CHF trades similarly poorly, however ranges remain contained in EUR/CHF which, given the single currency's acute weakness in recent weeks, may suggest markets view the Swiss economy as facing similar growth risks relative to the Eurozone in the years ahead.
  • Focus for the session ahead turns to US inflation, with markets looking to gauge inflation momentum headed into the inauguration of President-Elect Trump in January. With Trump's government likely to adopt a pro-inflationary policy mix, Fed pricing remains a key focus - particularly as ECB-Fed implied policy rate differentials continue to blow wider.
  • Outside of the US CPI print, appearances from Fed's Kashkari, Williams, Logan, Musalem and Schmid are due, which should keep US monetary policy a key focus Wednesday.