USD/JPY Continues To Track Higher, 150.00 Test Within Sight

USD/JPY was mostly on the front foot post the Asia close on Wednesday. In NY trade we breached the 149.50 level, getting above 149.70 before consolidating somewhat. We finished the session near 149.65 and track a touch lower in early trade today. Yen lost 0.37% for the session, around mid-point from a relative G10 standpoint.

• Focus remains on upside momentum in the pair. We touched highs from Oct 24 last year in Wednesday NY trade. Next stop is the 150.00 level, although markets are likely to be wary of Japan FX intervention risks.
• FinMin Suzuki has stepped up the verbal rhetoric this week, although the language used has been fairly consistent (watching FX markets with a strong sense of urgency etc). On the downside for USD/JPY the 20-day EMA sits back at 147.46.
• Fresh upside in US yield momentum is keeping USD/JPY supported, along with broader USD sentiment. The 10-yr US-JP swap rate differential is consolidating above +330bps.
• The local data calendar just has weekly investment figures on tap today.
• On the policy front, the MNI policy team reports that the Bank of Japan is looking at a possible shift to a quantitative target for bond purchases when it finally raises its overnight rate from negative levels in a move which could happen as soon as January (see this link for more details).