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Sizeable USD/JPY Expiry Proves Magnetic

FOREX
  • USD/JPY faded further off the week's cycle high of 150.78 across Asia-Pac hours, with prices narrowing in on the Y150.00 handle. A sizeable option strike at the handle ($4.4bln rolling off at Y150.00 - comprised of $2.95bln in calls and $1.4bln in puts).
  • Equity markets sit higher ahead of the Friday open, with US futures pointing to a positive open at the bell. A more reassuring set of corporate earnings after-market on Thursday have steadied sentiment, with Amazon's solid cloud unit results driving a 5.3% rally in the shares pre-market.
  • Firmer stock markets have provided a supportive backdrop for growth-proxies, putting AUD higher than all others in G10. AUD/USD has recouped around 80 pips off the cycle lows posted on Thursday, but markets need to top the 50-dma resistance of 0.6396 (a level that held on Sep29, Oct11 and Oct12).
  • The EUR shrugged off a sharp deceleration in Brandenburg CPI to 4.6% Y/Y from 5.6% prior, led by energy prices of -3.2%. EUR/USD is flat on the day, but remains at the lower-end of the week's range, leaving 1.0524 as intraday support and 1.0609 a near-term resistance - the 50% retracement for the pullback from 1.0694.
  • Data focus Friday rests on the September US personal income/spending release as well as the final University of Michigan sentiment survey for October. Fed's Barr is the sole central bank speaker, but the Fed's pre-decision media blackout period means he'll be steering clear of monetary policy.
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