USD/JPY Breaches 135.00, As Next Week's BoJ Meeting Is Coming Into Focus

Much focus post the Asia close was on a Bloomberg article, which cited sources in reporting that the Bank of Japan are said to be wary over any tweak of yield curve control in April, with the smoother curve said to suggest no need for a policy move at this juncture. The piece added that the bank is said to be mulling if a guidance change can wait or not. USD/JPY spiked above 135.00, touching 135.13 before selling interest capped the move.

• We fell back to 134.25/30 before recovering back into the 134.70/75 region by the NY close. This left the yen the third weakest performer in the G10 space for Wednesday's session. We sit slightly lower now, last around 134.60/65.
• Speculation around the YCC outlook comes ahead of next week's board meeting, which finishes on April 28.
• The other driver for USD/JPY was the positive US yield tone, although the 2yr could finished away from earlier highs above 4.28% (closing around 4.245%).
• From the technical side, resistance at 134.75, the 61.8% retracement of the Mar 8 - 24 bear leg, has been cleared. This strengthens the current bullish theme and signals scope for a climb towards 135.96 next, the 76.4% retracement. On the downside, initial firm support lies at 133.07, the 20-day EMA.
• On the data front today, we have March trade figures, with the trade position expected to remain negative and export growth moderate to 2.4% y/y (from 6.5%). Also out is with weekly foreign investment flows and later on the tertiary industry index and machine tool orders.