USD/JPY Sees Sharp Pullback After Hitting Fresh YTD Highs

Yen was the second best performer in the G10 space for Thursday's session, up 0.30% (only trailing NOK a touch). Lower US yields as the NY session progressed helped drag USD/JPY lower. The pair is around 145.30 in early Friday trade.

• Post US CPI highs in the pair were at 146.41, which was a fresh high back to mid December of last year. However, as US yield momentum waned, with the 2yr hitting a fresh YTD low, USD/JPY fell in sympathy.
• Pre-data lows of 145.14 will act as the immediate target, however, it is worth noting a key short-term support has been defined much lower at 143.42, the Jan 9 low.
• The local data calendar has weekly investment flows, Nov trade and current account figures, Dec bank lending and the Eco watchers survey all on tap.
• The latest insight from our policy team in Tokyo points to an April lift off for the BoJ, but uncertainty is evident in terms of what will then become of the main interest rate target (see this link for more details, the piece was out late yesterday).
• In the FX option expiry space today, note the following cuts. 145.00 ($1.6bln), 146.00-15 ($1.4bln) and 147.00 ($1.4bln).