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USD/JPY Grinds Higher In Cautious Environment

JPY

USD/JPY traded with a bullish bias Thursday after clawing back initial losses into the London morning, but struggled to climb beyond Y148.50. Japanese markets were shut for a public holiday.

  • Widening U.S./Japan yield gaps lent support to the pair, with 2-year spread expanding 9.4bp & 10-year differential up4.6bp come the end of play. Note that JGBs were closed, while cash U.S. Tsys did not trade until London/NY hours.
  • Equity benchmarks were softer across the board as cautious mood took hold in the interim between the Fed's monetary policy decision and monthly U.S. payrolls data. Despite weak performance from the global stock markets, the VIX index fell to multi-week lows.
  • The yen took comfort in general risk aversion and the USD was the only G10 currency that fared better. Demand for safe havens was evident, with the CHF trading on a firmer footing.
  • Short-end tenors led gains in USD/JPY risk reversals Thursday, with one-month skews topping -0.5 vol for the first time since Sep 22.
  • Spot USD/JPY last deals at Y148.31, a touch higher on the day. The key topside target is Oct 21 cyclical high located at Y151.95. Conversely, bears look for a dip through Oct 27 low/50-DMA at Y145.11/144.99.
  • Final Jibun Bank Services PMIs are the only items on Japan's data docket today.
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USD/JPY traded with a bullish bias Thursday after clawing back initial losses into the London morning, but struggled to climb beyond Y148.50. Japanese markets were shut for a public holiday.

  • Widening U.S./Japan yield gaps lent support to the pair, with 2-year spread expanding 9.4bp & 10-year differential up4.6bp come the end of play. Note that JGBs were closed, while cash U.S. Tsys did not trade until London/NY hours.
  • Equity benchmarks were softer across the board as cautious mood took hold in the interim between the Fed's monetary policy decision and monthly U.S. payrolls data. Despite weak performance from the global stock markets, the VIX index fell to multi-week lows.
  • The yen took comfort in general risk aversion and the USD was the only G10 currency that fared better. Demand for safe havens was evident, with the CHF trading on a firmer footing.
  • Short-end tenors led gains in USD/JPY risk reversals Thursday, with one-month skews topping -0.5 vol for the first time since Sep 22.
  • Spot USD/JPY last deals at Y148.31, a touch higher on the day. The key topside target is Oct 21 cyclical high located at Y151.95. Conversely, bears look for a dip through Oct 27 low/50-DMA at Y145.11/144.99.
  • Final Jibun Bank Services PMIs are the only items on Japan's data docket today.