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USD/JPY Near 149.00, Yen Underperforms Dollar Pullback

JPY

USD/JPY largely tracked sideways post the Asia close on Wednesday. We currently track near 149.05, little changed from closing levels on Tuesday. Wednesday highs were just above 149.30, while dips towards 148.75 were supported in NY trade on Wednesday.

  • Yen saw some benefit from the US yield pull back amid mixed US data (weaker than forecast ADP, but slightly higher ISM services), but it lagged the likes of GBP and EUR.
  • The better equity tone in US markets may have weighed on yen against crosses in US trade, although CAD and NOK still faltered on lower oil prices.
  • USD/JPY still looks too low relative to US-JP 10yr swap differentials, which have only just moved off recent highs (+338bps based of yesterday's Japan closing swap levels).
  • Focus remains on whether the authorities intervened in FX markets on Tuesday, something a number of officials refused to comment on yesterday. Bloomberg notes onshore broker estimates suggest no intervention took place (see this link for more details).
  • On the data front today we have weekly investment flow data.

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