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FOREX: JPY Weakness Puts Currency on Course for Post-Intervention Lows

FOREX
  • JPY trades poorer against all others in G10 headed into the NY crossover, prompting USD/JPY to full reverse the move triggered by Wednesday's softer-than-expected US CPI print. Further gains for the pair would put prices on course for a test of the weekly highs at Y157.40 and the bull trigger and key resistance of 157.71. Clearance of this level would put USD/JPY at new post-intervention highs.
  • While USD/JPY's rally is notable, EUR/JPY is gaining in tandem. A break and close above the Y170.00 handle opens 170.89 next - levels which will keep pressure on the trade-weighted JPY (circa 1.3% off the levels that triggered intervention), and keep the currency in focus before Friday's BoJ decision.
  • GBP will be watched carefully through the release of the Labour Party manifesto later today. The plans of the presumptive winners of the July 4th election will be dissected carefully on tax and spend, as the likely incumbent government pledge not to raise taxes, while also reinvigorating the economy. GBP/USD remains either side of the 1.2800 level, with the S/T bull trend intact after yesterday's cycle high 1.2860 print.
  • US PPI takes focus Thursday, rounding off a trifecta of US risk events kicked off by the CPI print yesterday. PPI numbers will be used to further gauge expectations for the next PCE release, set for June 28th. The central bank speaker slate is quieter, although Fed's Williams is set to interview the US Treasury Secretary Yellen at 1700BST/1200ET, which could elicit interest.
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