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JPY: Yen Up On Fresh Fed Speculation, Economists See No BoJ Change Next Week

JPY
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USD/JPY tracked lower late in US trade on Thursday, with the pair falling sub 141.80, and we track close to this level in early Friday dealings. Yen was buoyed by late US market speculation (from both the WSJ & FT) around the size of the first Fed cut next week (25bps versus 50bps being a close call). Yen gains for Thursday were 0.38%, only outperforming CHF and CAD in the G10 space though. 

  • Broader equity sentiment was positive for EU and US markets, SPX up 0.75%, which likely weighed on relative yen performance. Earlier on Thursday the ECB cut rates by 25bps, as expected, but said it was not committing to a predetermined rate path.
  • Core global yields were mostly higher, particularly in the EU, so another yen headwind. US yields at the front end moved off their highs late in US trade due to the media articles speculating on the size of the Fed cut next week. US-JP yield differentials sit up a touch from recent lows.
  • For USD/JPY technicals, short term gains are considered corrective, with bears still in the drivers seat. Focus will remain on earlier lows this week at 140.71, while resistance is at 144.97, 20-day EMA.
  • The local data calendar just has July final industrial production figures today, which is unlikely to shift market sentiment.
  • Focus is turning to next Friday's BoJ decision, although a recent Bloomberg survey indicated no economists expect a hike next week, with around half surveyed seeing the next rate move in December. See this link. 
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USD/JPY tracked lower late in US trade on Thursday, with the pair falling sub 141.80, and we track close to this level in early Friday dealings. Yen was buoyed by late US market speculation (from both the WSJ & FT) around the size of the first Fed cut next week (25bps versus 50bps being a close call). Yen gains for Thursday were 0.38%, only outperforming CHF and CAD in the G10 space though. 

  • Broader equity sentiment was positive for EU and US markets, SPX up 0.75%, which likely weighed on relative yen performance. Earlier on Thursday the ECB cut rates by 25bps, as expected, but said it was not committing to a predetermined rate path.
  • Core global yields were mostly higher, particularly in the EU, so another yen headwind. US yields at the front end moved off their highs late in US trade due to the media articles speculating on the size of the Fed cut next week. US-JP yield differentials sit up a touch from recent lows.
  • For USD/JPY technicals, short term gains are considered corrective, with bears still in the drivers seat. Focus will remain on earlier lows this week at 140.71, while resistance is at 144.97, 20-day EMA.
  • The local data calendar just has July final industrial production figures today, which is unlikely to shift market sentiment.
  • Focus is turning to next Friday's BoJ decision, although a recent Bloomberg survey indicated no economists expect a hike next week, with around half surveyed seeing the next rate move in December. See this link.