USD/JPY Breaches 137.00 Before Edging Lower, Tokyo CPI On Tap Today

USD/JPY breached 137.00 post the Asia close (high of 137.09), but we found some selling interest above this level. We closed the NY session in the 136.70/75 region, a loss of 0.40% for Thursday's session. There was some relief for the yen as US yields pulled back from session highs (on mixed comments from the Fed's Bostic).

• Still, the US-JP 10yr swap spread trend remains skewed to the upside, now back to +297bps. For USD/JPY, we have pierced and traded above 136.67, the 38.2% retracement of the down leg between Oct 21 and Jan 16. A clear break of this hurdle would set the scene for a climb towards 138.17, the Dec 15 high. The Mar 1 low of 135.26 is support on the downside.
• Today the focus will be on Tokyo CPI data for Feb. The headline is expected to ease to 3.3% from 4.4%. This is largely due to lower energy prices, with the core measure (ex food and energy) expected to tick slightly higher to 3.1% from 3.0% (range of forecast estimates is 2.8% to 3.5%).
• Jobless rate data is also due, then later on the services PMI (final read) for Feb is out.
• The latest Bloomberg survey sees June as a potential window for the next BoJ policy shift. This would be Ueda's second policy meeting as the new BoJ Governor. See this link for more details.