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of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
JPY
Japanese officials managed to jawbone spot USD/JPY away from the psychologically significant Y145.00 figure Wednesday, with the pair extending losses on the back of reports of a rate check being conducted by the BoJ as a potential preparation for an FX intervention.
- Japan's FX czar & Finance Minister stepped up their warnings against excessive movements in the exchange rates, with both refusing to rule out any options in their FX response. In the Tokyo/London crossover, multiple outlets flagged that the BoJ was consulting with market participants about indicative USD/JPY levels at which it could intervene.
- Intervention talk outweighed the BoJ's decision to boost asset purchases in defence of its 0.25% 10-Year JGB yield target. The spread on U.S./Japan 2-Year yields edged higher, printing new multi-year highs in the process, while 10-Year differential was slightly thinner come the end of play.
- Intensified jawboning & reports of the rate check coming as USD/JPY approached the Y145.00 mark makes this figure a key line in the sand for the time being. On the flip side, bears would be pleased to see a break under Sep 9 low of Y141.51. The rate deals at Y142.99 this morning, down 9 pips on the day.
- Worth noting that USD/JPY option skews retreated sharply in tandem with the downswing in the spot rate, with the short end leading declines. One-month skews were more than 1% bid for yen calls for the first time since early Aug and remains subdued. One-year tenor is clawing back some of yesterday's losses at typing.
- Japan's monthly trade data will cross the wires later today.
Fig. 1: USD/JPY 1-Month vs. 1-Year Risk Reversals
Source: MNI - Market News/Bloomberg
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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