JPY Atop The G10 Pile As BoJ Speculation Continues And Equities Weaken

JPY swings continue to dominate in early Asia-Pac dealing, with USD/JPY operating in a ~160 pip range thus far.

• Outside of the early swings that came alongside the reopen of U.S. equity & Tsy futures, we would point to the previously alluded to speculation surrounding the potential for a hawkish round of BoJ inflation projection adjustments as a driving factor for JPY strength in early ’23 trade. USD/JPY has traded to a fresh multi-month low and is now through Y130.00. Lower liquidity owing to a public holiday in Japan is probably exacerbating the moves.
• Elsewhere, the USD has outperformed the remainder of its G10 FX peers, excluding the CHF, with e-minis now in the red, more than reversing their early shunt higher, providing support for the traditional safe haven FX.
• Macro headline flow remains light, with eyes on the Chinese market reaction after softer than expected official PMI data (released over the weekend), while the latest Chinese Caixin manufacturing PMI print headlines the Asia-Pac docket.
• Further out, flash German CPI data (state and national) provides the highlight of the broader docket on Tuesday.