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JPY: Yen Slumps Amid Dovish BoJ Rhetoric, USD/JPY Above 50-day EMA

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The Japanese yen was easily the worst G10 performer for Wednesday trade, losing just under 2% against the USD (the currency's biggest daily loss since 2022). The pair tracks around 146.30/35 in early Thursday trade, just off late US session highs from Wednesday trade (146.51). This high was just above Friday highs in the pair, which came ahead of the LDP leadership run-off and when Takaichi looked to have a better chance of securing victory, before Ishiba prevailed. 

  • Comments from new PM Ishiba that now is not the time for additional rate hikes weighed on the yen, while BoJ Governor Ueda was also quite cautious around the rate outlook in comments yesterday.
  • This backdrop compares to the pre-LDP leadership election period in which Ishiba was seen as more of a monetary policy hawk, particularly compared to Takaichi.
  • Broader cross asset trends also weighed on the yen, with US yields recouping Tuesday's losses, as the ADP jobs print modestly beat expectations. We also had steady equity market sentiment, while the US VIX index remains sub 20%, as no further significant escalation was seen in the Middle East. Oil prices are off Tuesday highs.
  • For USD/JPY we are now above the 50-day EMA, near 146.20. Note the Sep 3 rests at 147.21. The 20-day EMA is back near 143.90.
  • Locally today we have the PMI services and composite revisions for September. A speech from BoJ board member Noguchi is also due.
  • In the option expiry space, we have the following for NY cut later: Y144.25-40($3.0bln). 
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The Japanese yen was easily the worst G10 performer for Wednesday trade, losing just under 2% against the USD (the currency's biggest daily loss since 2022). The pair tracks around 146.30/35 in early Thursday trade, just off late US session highs from Wednesday trade (146.51). This high was just above Friday highs in the pair, which came ahead of the LDP leadership run-off and when Takaichi looked to have a better chance of securing victory, before Ishiba prevailed. 

  • Comments from new PM Ishiba that now is not the time for additional rate hikes weighed on the yen, while BoJ Governor Ueda was also quite cautious around the rate outlook in comments yesterday.
  • This backdrop compares to the pre-LDP leadership election period in which Ishiba was seen as more of a monetary policy hawk, particularly compared to Takaichi.
  • Broader cross asset trends also weighed on the yen, with US yields recouping Tuesday's losses, as the ADP jobs print modestly beat expectations. We also had steady equity market sentiment, while the US VIX index remains sub 20%, as no further significant escalation was seen in the Middle East. Oil prices are off Tuesday highs.
  • For USD/JPY we are now above the 50-day EMA, near 146.20. Note the Sep 3 rests at 147.21. The 20-day EMA is back near 143.90.
  • Locally today we have the PMI services and composite revisions for September. A speech from BoJ board member Noguchi is also due.
  • In the option expiry space, we have the following for NY cut later: Y144.25-40($3.0bln).