USD/JPY Off Highs On Suzuki Comments, AUD/NZD Recovers Further

The BBDXY sits marginally lower, off 0.10%, last near 1237.10. There have been mixed trends in the G10 space though. AUD has outperformed against both NZD and JPY. Equity sentiment is mostly positive for the region and in terms of US futures, albeit led by the tech side. UST yields sit marginally higher.

• USD/JPY threatened to push above 148.50 in earlier trade, amidst a slightly higher yield backdrop and a close to expected Dec national CPI print.
• However, we saw some fresh verbal jawboning from FinMin Suzuki around watching FX levels closely and that FX rates should reflect fundamentals. This is the first such comments in a little over a month from the FinMin.
• USD/JPY dipped back to 148.15, but remained above earlier lows (147.94). We last tracked around 148.30/35.
• AUD/USD sits marginally higher, last around 0.6580. NZD/USD has lost ground back towards 0.6100, off around 0.25% at this stage. The AUD/NZD cross has recovered further, back to 1.0785, fresh highs from early Jan for the pair. We have seen a move higher in AU-NZ 2yr swap rate differentials this week, back to -60bps. This is highs back to Sep 2022.
• Looking ahead, UK and Canada retail sales figures for December are published. In the US, UMich consumer sentiment and inflation expectations may garner some interest, as well as existing home sales data.