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Treads Water In Early Asia Trade

JPY

USD/JPY swung to an intraday high of Y103.89 in Monday's London morning before sliding into the close and more than erasing initial gains as a result. A Nikkei piece re: PM Suga's willingness to defend the Y100 level in USD/JPY provided some interest early on. Elsewhere, well-documented risk developments (Covid situation/Brexit) were the main points of note.

  • Also on Monday, Japanese cabinet gave a nod to a record Y106.6tn budget for the next fiscal year, a 3.8% increase vs. the FY2020 spending plan.
  • Today's Kyodo report suggested that Toyota will halt its plants in France and the UK due to concern over the spread of a new mutation of the coronavirus.
  • The rate trades flat at Y103.33 as we type. Bears need a dip through Dec 17 low of Y102.88 before targeting Y102.75, the 1.00 projection of the Oct 7 - Nov 6 downleg from the Nov 11 high. Conversely, gains past Monday's high of Y103.89 would open up the 20-EMA at Y103.84.
  • Mind that $1.2bn worth of options with strikes at Y103.00 are due to roll off at today's NY cut. There is another heavy option expiry ($1.4bn) with strikes at that level coming up Wednesday.
  • Looking ahead, Japanese Tokyo CPI, unemployment and retail sales hit the wires on Friday.
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