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Hawkish Central Banks Weigh Further On Japanese Yen

FOREX
  • Weakness for the Japanese Yen stands out on Thursday, with USDJPY rising 0.82% on the session and now back above the 143 mark for the first time since November last year. Central banks on Thursday set a fairly hawkish turn placing upward pressure on core yields. Up next on the topside for USDJPY is 143.77, the 2.0% 10-dma envelope.
  • Helped by the soaring USDJPY, the greenback maintains its upward bias in late session with broad dollar indices hovering close to session highs as we approach the APAC crossover. The DXY is now up 0.30%, having reversed the majority of Wednesday’s decline.
  • Interestingly, GBPUSD hovers just above session lows heading into the close, despite the hawkish surprise from the Bank of England. Markets continue to ponder the potential impact of a peak rate circa 6%, which explains GBP largely shrugging off the developments and trading on the heavy side heading into Friday. For cable, short-term support levels are well defined at 1.2680 (the May 10 high) and 1.2630 (the Jun 15 low).
  • NOK remains an outperformer across G10, with a hawkish Norges bank briefly tipping EUR/NOK back toward the 100-dma support undercutting at 11.4405, however those declines have largely been pared throughout the session. A return lower to that level, which was last crossed in November last year, and a break below would mark a key medium-term momentum shift in the cross.
  • Worth noting that in emerging markets, an underwhelming 650bps hike from the central bank placed the Turkish lira under severe selling pressure. USDTRY currently trades at fresh all time highs around 24.85, having appreciated 5.40% on the day.
  • UK retail sales and Flash European PMIs headline a busy European docket on Friday.
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