Rangebound, But Uptrend Still Intact, PPI On Tap Today

USD/JPY largely stuck to recent ranges through Monday trade. Dips sub 151.20 were supported, while we finished the NY session in the 151.40/45 region. Monday highs were close to 151.55. For the session this left us unchanged versus end Friday levels, with yen underperforming a moderately softer USD backdrop (BBDXY -0.23%).

• US yields were mostly firmer through Monday trade, amid cautious Fed speak from Governor Cook - balance the risk of easing monetary policy too much or too soon, allowing inflation to linger above target, and taking too long to ease, which could harm the economy needlessly and deprive people of economic opportunities.
• Tsy yields climbed 3.5-4.7bps, which likely curbed USD/JPY downside to a degree. US-JP yield differentials have pushed higher, but remain off 2024 highs (10yr spread last around +351bps).
• Some caution may have also followed Kanda's step up in verbal rhetoric around FX early yesterday.
• Still, the technical backdrop for USD/JPY is unchanged and remains bullish. Sights are on 151.91 and 151.95, the Nov 13 high and Oct 1 ‘22 highs respectively. A break of this resistance would confirm a resumption of the long-term uptrend and open 152.66, a Fibonacci projection. Initial firm support is 149.68, the 20-day EMA.
• Locally today we have the Feb PPI services on tap, along with final Feb machine tool orders. The PPI is projected at 2.1% y/y, unchanged from Jan.
• Finally, note in the option expiry space the following for NY cut later today: Y151.00($529mln), Y151.25($632mln).