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USD/JPY Back Sub 157.00, But Yen Underperforms Broader G10 Gains

JPY

USD/JPY fell from around 157.30 to lows of 155.70/75 post the US Cpi miss. We rebounded back to 156.90, as the FOMC unfolded, which showed a dot plot projecting 1 rate cut this year (against 2 forecast and 3 outlined in March). The pair tracks around 156.60/65 in early Thursday dealings, after posting a 0.26% gain for Wednesday's session.

  • Broader USD losses were seen against the G10 (BBDXY fell -0.19%, DXY 0.51%), although yen was a relative underperformer, particularly compared to higher beta plays.
  • US Tsy yields finished around 6-10bps lower across the benchmarks, albeit up from session lows as the FOMC helped unwind some of the post CPI losses. US-JP yield differentials are lower, but above recent trough points.
  • For USD/JPY, Wednesday's intra-session low was above the 50-day EMA (near 155.07), while trendline support (154.54) from the Dec 28 low, also remained intact. On the topside May 29 highs at 157.71 remains a key resistance point.
  • The local data calendar has the Q2 BSI survey on tap today, along with weekly offshore investment flows.
  • Note the following option expiries for NY cut later today: Y155.00-10($1.3bln), Y156.00-20($1.5bln), Y156.45-55($516mln), Y158.00-10($1.1bln)
  • Tomorrow delivers the BoJ meeting outcome, which is expected to consider a cut to the bond buying program, but no change in rate settings, see the MNI preview here. The Nikkei also suggested reduced bond purchases could be considered (see this link).

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