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USD/JPY Lower For The Week, But Holding Above Key Support, BoJ Next Friday

JPY
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USD/JPY has drifted back to 155.75, to be slightly weaker in yen terms for the session. Earlier highs rest at 155.94, which came post unchanged BoJ bond buying ops, while FinMin Suzuki stated FX intervention should only be used on a limited basis.

  • USD/JPY is still tracking lower for the week (we ended last Friday at 157.31), which is consistent with lower US-JP yield spreads over this period. 2yr spreads are back at +439bps, against recent highs around +463bps. The 10yr spread is back to +332bps.
  • Arguably USD/JPY remains too high relative to such trends, particularly lower 10yr spreads, but such divergences have been evident in recent years.

Fig 1: USD/JPY Versus Yield Differentials

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USD/JPY has drifted back to 155.75, to be slightly weaker in yen terms for the session. Earlier highs rest at 155.94, which came post unchanged BoJ bond buying ops, while FinMin Suzuki stated FX intervention should only be used on a limited basis.

  • USD/JPY is still tracking lower for the week (we ended last Friday at 157.31), which is consistent with lower US-JP yield spreads over this period. 2yr spreads are back at +439bps, against recent highs around +463bps. The 10yr spread is back to +332bps.
  • Arguably USD/JPY remains too high relative to such trends, particularly lower 10yr spreads, but such divergences have been evident in recent years.

Fig 1: USD/JPY Versus Yield Differentials

Keep reading...Show less