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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.
JPY
USD/JPY was volatile post the Asia close, from highs near 146.55, we slumped 100pips lower to 145.55 after disappointing US data. However, dollar demand pulled the pair back to 146.20/25 by the NY close, which left yen 0.25% weaker for Wednesday's session. We track just below 146.20 in recent dealings. It was the second worst performer in the G10 space, underperforming the likes of GBP and EUR.
- US yields were only moderately lower for Wednesday's session in aggregate, with falls capped at -1bps. The 10yr yield dipped to 4.085% but finished above 4.11%. This likely helped limit the downside in USD/JPY.
- Wednesday's US data, which was somewhat second tier, disappointed in aggregate, with the Citi US surprise index down off recent highs.
- The US-JP 10yr swap differential is comfortably off recent highs, with USD/JPY sitting a little elevated relative to this trend, see the chart below. We may see some modest downside in Japan 10yr swap rates today, although we have been sticky above 0.80% in recent weeks.
- Locally there is a busy data calendar today, with July retail sales on tap, July IP and housing starts, along with weekly investment flows. It's also the final trading day of the month, which could also influence USD/JPY.
- BoJ Board member Nakamura also speaks at 10:30 local time (02:30 BST). Bank of Japan Board Member Naoki Tamura said on Wednesday the achievement of the bank's 2% price target was clearly in view, however, the continuation of easy policy was appropriate as more time is needed.
Fig 1: USD/JPY & US-JP 10Yr Swap Rate Differentials
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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