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JPY: JPY on Cusp of Closing Takaichi Gap

JPY
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The post-Ishiba rally in USD/JPY continues, with the pair fast approaching the 146.49 level, a break above which would entirely close the gap opened by the conclusion of the LDP leadership race on Friday - and reverse the move initially guided by concerns over a potential win for pro-easing Abenomics candidate Takaichi.

  • As covered earlier today, markets were clearly overly interpreting Ishiba's approach to monetary policy, evident in JPY's weakness today in response to both his post-Ueda meeting commentary ("not the environment for an additional rate hike") as well as BBG reports overnight suggesting the new cabinet is "unlikely to want the BoJ to rush into further rate hikes".
  • Further strength here opens resistance seen firmer into 147.21 and 148.13 in particular - the 38.2% retracement for the downleg off the early July high. Interestingly, JPY futures so far Wednesday have been below average - with JPY futures posting activity of 13% below what you'd expect to see at this time of day.
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The post-Ishiba rally in USD/JPY continues, with the pair fast approaching the 146.49 level, a break above which would entirely close the gap opened by the conclusion of the LDP leadership race on Friday - and reverse the move initially guided by concerns over a potential win for pro-easing Abenomics candidate Takaichi.

  • As covered earlier today, markets were clearly overly interpreting Ishiba's approach to monetary policy, evident in JPY's weakness today in response to both his post-Ueda meeting commentary ("not the environment for an additional rate hike") as well as BBG reports overnight suggesting the new cabinet is "unlikely to want the BoJ to rush into further rate hikes".
  • Further strength here opens resistance seen firmer into 147.21 and 148.13 in particular - the 38.2% retracement for the downleg off the early July high. Interestingly, JPY futures so far Wednesday have been below average - with JPY futures posting activity of 13% below what you'd expect to see at this time of day.