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of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
JPY
USD/JPY went offered Thursday, while a subsequent decline in U.S. Tsy yields allowed it to cling onto losses. The rate operates near neutral levels ahead of the release of Tokyo CPI.
- The pair lost altitude in Asia & Europe as the PBOC's moves to contain yuan weakness inspired USD/CNH sales which weighed on the broader greenback strength.
- The rate briefly turned bid in London/NY crossover as participants parsed some hawkish comments from Fed's George & Bostic who spoke ahead of the Jackson Hole symposium.
- However, the rate bowed to pressure from retreating U.S. Tsy yields. The U.S./Japan 10-year yield gap shrank ~8bp, while 2-year spread was down ~2bp.
- The U.S. equity space shrugged off pre-Jackson Hole Fedspeak with the three main indices posting gains. The VIX index eased off to weekly lows. The yen held firm nonetheless, outperforming all G10 peers save for the Antipodeans.
- USD/JPY 1-month risk reversal returned below par as skews shifted in favour of yen calls across the maturity curve.
- The spot rate last deals at Y136.52, little changed on the day. Bulls look for gains past Aug 23 high of Y137.71, which would open up Jul 14 cycle high of Y139.39. Bears keep an eye on the 100-DMA at Y132.64 and a break here would expose Aug 11 low of Y131.74.
- Tokyo CPI will hit the wires later today. Core prices are expected to have grown 2.5% Y/Y this month after a 2.3% increase in Jul.
Fig. 1: USD/JPY vs. USD/JPY 1-Month Risk Reversal
Source: MNI - Market News/Bloomberg
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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