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Hawkish Fedspeak Keeps Yen Under Pressure

JPY

An upswing in U.S. Tsy yields contributed to a rebound in USD/JPY in Tuesday's London/NY hours, with the pair finishing a handful of pips above neutral levels.

  • Hawkish Fedspeak continued Tuesday, with St. Louis' James Bullard pushing for more rate increases. Charles Evans of Chicago and Neel Kashkari of Minneapolis echoed his call for bringing inflation under control.
  • Meanwhile, the BoJ reaffirmed its dovish credentials by conducting unscheduled bond purchase operations to contain upward pressure on JGB yields.
  • U.S./Japan 2-Year yield spread was 6.6bp smaller come the end of the day, despite trimming the bulk of initial narrowing. 10-Year gap widened 2.0bp, printing fresh cyclical highs.
  • USD/JPY risk reversals printed fresh cyclical lows, but then recovered in tandem with the spot rate. One-month skews moved away from worst levels in three months.
  • Spot USD/JPY last deals at Y144.85, up 5 pips on the day. Topside technical focus falls on Sep 22 high/2.764 proj of the Aug 2 - 8 - 11 price swing at Y145.90/146.03. Bears keep an eye on Sep 22 low of Y140.36.
  • The BoJ will publish the minutes from its July monetary policy meeting. Looking further afield, the latest batch of economic activity data will take focus on Friday.
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An upswing in U.S. Tsy yields contributed to a rebound in USD/JPY in Tuesday's London/NY hours, with the pair finishing a handful of pips above neutral levels.

  • Hawkish Fedspeak continued Tuesday, with St. Louis' James Bullard pushing for more rate increases. Charles Evans of Chicago and Neel Kashkari of Minneapolis echoed his call for bringing inflation under control.
  • Meanwhile, the BoJ reaffirmed its dovish credentials by conducting unscheduled bond purchase operations to contain upward pressure on JGB yields.
  • U.S./Japan 2-Year yield spread was 6.6bp smaller come the end of the day, despite trimming the bulk of initial narrowing. 10-Year gap widened 2.0bp, printing fresh cyclical highs.
  • USD/JPY risk reversals printed fresh cyclical lows, but then recovered in tandem with the spot rate. One-month skews moved away from worst levels in three months.
  • Spot USD/JPY last deals at Y144.85, up 5 pips on the day. Topside technical focus falls on Sep 22 high/2.764 proj of the Aug 2 - 8 - 11 price swing at Y145.90/146.03. Bears keep an eye on Sep 22 low of Y140.36.
  • The BoJ will publish the minutes from its July monetary policy meeting. Looking further afield, the latest batch of economic activity data will take focus on Friday.