USD/JPY Can Consolidate Ahead Of Next Week's US CPI Print

USD/JPY sits just below 143.90 currently. Dips sub 143.50 overnight were supported, although the pair didn't make fresh highs either. This came even as Fed expectations for the September meeting pushed higher, and the ECB delivered a 75bps hike. EUR/JPY also largely tracked sideways, albeit very close to recent highs (last just above 144.00).

• Not much new came out of the 3-way meeting between the MoF, BoJ and FSA late yesterday, see this link for more details.
• This was likely the base case for the market, with intervention risks still viewed as low at the current juncture. This is likely to leave the market firmly in the dip buying camp from a USD/JPY standpoint.
• Still, the pair may struggle to make fresh highs in the near term (i.e. break above 145.00). 1 month implied vols are off recent highs, as are risk reversals.
• We might have expected higher levels overnight given the yield moves and lower risk aversion in equities. The fact that we didn't suggests USD/JPY may enter into more of a consolidative tone in the near term.
• We are clear of some major event risks as well, with ECB and Powell out of the way. Next Tuesday's US CPI print is arguably the next big offshore event risk.
• Locally, it's just August money stock data on tap.