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JPY Continues Downward Trajectory

FOREX
  • USDJPY extended its winning streak on Wednesday, trading to the highest level since March 2020, triggering some volatile price action in the pair.
  • As the 2021 highs and the technical bull trigger were broken through 110.97, a flurry of demand prompted a 111.10 print. However, a lack of follow through prompted a sharp reversal in fortune with no headlines behind the move.
  • The JPY lurch higher coincided with sizeable spike in JPY futs volumes, with just shy of 2,000 contracts changing hands inside 60 seconds at 1236BST/0736ET, roughly $225mln cash equivalent. USDJPY retreated back to the overnight highs of 110.66 which acted as firm support. The pair spent the majority of the session grinding back towards the 111 mark, continuing to benefit the crosses (notably AUDJPY & NZDJPY +0.57%).
  • The dollar index remains unchanged from Tuesday's close. Initial weakness saw fresh lows for the week just above 91.50, however, a small bounce throughout the US session capped G10 FX volatility.
  • German IFO on Thursday morning precedes the Bank of England decision/statement where the most notable risk is if another MPC member joins Haldane in voting for a reduction to the QE target. MNI deem this risk to be low.
  • Thursday's US session sees a good amount of data on the docket, headlined by the final Q1 GDP reading as well as initial jobless claims.

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