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USD/JPY Drifts Higher, Vols Spike Amid Intervention Risks/BoJ Coming Into View

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With Australia and New Zealand markets out for the ANZAC day holiday, focus has largely rested on USD/JPY. The pair has firmed a little in the first part of Thursday trade, last in the 155.45/50 region. This is through Wednesday highs and fresh highs back to 1990 for the pair. The BBDXY USD index is unchanged though near 1261.

  • Familiar FX rhetoric from FinMin Suzuki crossed the wires around watching FX markets closely. Chief Cabinet Secretary also noted that is it important for FX markets to reflect fundamentals (BBG). However, yen didn't strengthen on the comments.
  • Overnight vols surged to 28% at one stage, as tomorrow's BoJ meeting comes into view. This is highs back to mid Dec last year. The skew around risk reversals has also been to the downside in USD/JPY.
  • Elsewhere, the main cross asset feature of note has been a sharp fall in US equity futures at the open, led by the Nasdaq (-1.20%), as Meta's earnings update from late Wednesday US time, weighed heavily on sentiment.
  • The impact on higher beta plays has been minimal though, with AUD/USD up a touch to 0.6505, while NZD/USD is around 0.5940. Liquidity is no doubt lighter though in both markets.
  • US yields sit a touch higher, but gains are under 1bps at this stage.
  • Looking ahead, we have Wkly Claims, GDP, Core PCE Index in US. In Europe we have German consumer confidence and some ECB speak.
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With Australia and New Zealand markets out for the ANZAC day holiday, focus has largely rested on USD/JPY. The pair has firmed a little in the first part of Thursday trade, last in the 155.45/50 region. This is through Wednesday highs and fresh highs back to 1990 for the pair. The BBDXY USD index is unchanged though near 1261.

  • Familiar FX rhetoric from FinMin Suzuki crossed the wires around watching FX markets closely. Chief Cabinet Secretary also noted that is it important for FX markets to reflect fundamentals (BBG). However, yen didn't strengthen on the comments.
  • Overnight vols surged to 28% at one stage, as tomorrow's BoJ meeting comes into view. This is highs back to mid Dec last year. The skew around risk reversals has also been to the downside in USD/JPY.
  • Elsewhere, the main cross asset feature of note has been a sharp fall in US equity futures at the open, led by the Nasdaq (-1.20%), as Meta's earnings update from late Wednesday US time, weighed heavily on sentiment.
  • The impact on higher beta plays has been minimal though, with AUD/USD up a touch to 0.6505, while NZD/USD is around 0.5940. Liquidity is no doubt lighter though in both markets.
  • US yields sit a touch higher, but gains are under 1bps at this stage.
  • Looking ahead, we have Wkly Claims, GDP, Core PCE Index in US. In Europe we have German consumer confidence and some ECB speak.