JPY: Holding Above 148.00 As US Equities/Yields Recover Some Ground

Yen lost around 0.30% for Wednesday's session, the second worst performer in the G10 space (after SEK, which fell 0.80%). USD/JPY tracks near 148.20/25 in early Thursday dealings, but saw reasonable volatility as the US CPI print unfolded. The pair exhibited a 100 pip range within the short post-data timeframe, initially falling to 148.20 before surging to a high of 149.19, briefly extending the bounce from yesterday’s lows to 1.8%. We spent much of the remainder of the US session drifting lower.

• In terms of technicals, a bear cycle remains in play, with recent USD/JPY gains appearing corrective. A fresh cycle low earlier this week strengthens a bearish theme. The move down has resulted in a print below 146.95, 61.8% of the Sep 16 ‘24 - Jan 10 bull leg. This opens 145.92 next, the Oct 4 2024 low. Key short-term resistance is unchanged at 151.30, Mar 3 high.
• In the cross asset space, US yields finished higher in the wash up of the US CPI print. The 10yr Tsy back above 4.31%. This is helping stabilize US-JP yield differentials and thereby providing less downside impetus for USD/JPY.
• Focus remains on JGB yields, with BoJ Governor Ueda comments yesterday suggesting comfort with the recent local yield rise. In any case, US yield developments may still continue to dictate US-JP yield differential trends.
• Another marginal yen negative was the rise in global equities on Wednesday, showing stability signs after the recent sharp sell off, particularly in US markets.
• On the data front today we have offshore weekly investment flows.
• Note in the option expiry space, the following for NY cut later: Y148.00($1.3bln).