USD/JPY Edges Back Towards 128.00, BoJ In Focus Today

USD/JPY continued to find selling interest post the Asia close on moves above 129.00. The pair tracked lower through NY trade, in line with broader softer USD sentiment (ex EUR). However, we couldn't get sub 128.00 and track at 128.15/20 currently. Market focus rests squarely with the BoJ outcome today.

• Our full preview is here. Most speculation rests on whether there will be further tweaks to the YCC framework or a complete abandonment of the policy altogether.
• A status quo outcome from the BoJ may induce a kneejerk reaction move higher in USD/JPY but our sense is the market will still use this as an opportunity to reload shorts, as such an outcome is likely to be viewed as kicking the can down the down.
• Recent highs rest just above the 129.00 level, beyond that is the 130.00 figure level, while the 20-day EMA comes in at 131.72. On the downside YTD lows sit close to 127.20.
• USD/JPY overnight vol is at 48.60%, but we got to 54.35% during Tuesday's session, fresh intra-day highs back to 2008. 1 week vol has edged down a touch to 22.35%.
• Ahead of the BoJ meeting, core machinery orders print, while IP figures and capacity utilization print later.