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USD/JPY Stabilizes With Global Equity Rise/Firmer US Yield Backdrop

JPY
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USD/JPY sits near 144.55/60 in early Wednesday dealings, slightly up from late Tuesday lows in NY trade. We spent yesterday largely wedged between 144.00 on the downside, while moves to 146.30/40 capped us on the topside. Yen lost a modest 0.11% for Tuesday's session.

  • Broader USD sentiment was mixed, with EUR and GBP lower as well, but higher beta FX rose in line with the better global equity tone (SPX and Nasdaq both up +1%), as sentiment stabilized somewhat following the recent rout.
  • The US Tsys curve steepened, with futures approaching pre US NFP levels from last week. This helped stabilize US-JP yield differential levels, albeit still close to multi month lows.
  • The bounce off Monday lows for USD/JPY has provided a sense of stability in the pair, but prices remain at risk of a resumption of the short-covering JPY rally, with both leveraged funds and asset managers still maintaining a deep net short JPY position.
  • Tech level wise, note that the pair is in an extreme oversold condition, however a clear reversal pattern / signal in price is required to highlight a change in direction. Initial resistance is seen at 146.66, the Aug 5 high. Key support is seen at 140.25 the Dec 28 low from last year.
  • The data calendar has the coincident and leading indices out today (not a market mover). We also have BoJ Rinban ops on tap.
  • The BoJ, FinMin and Financial Services Agency met late yesterday, seeking to reassure market confidence, although no concrete policy actions emerged. BoJ Governor Ueda is also scheduled to appear before parliament either this week or next, where the latest BoJ actions will be examined by lawmakers in light of the sharp swings in local equities and other asset markets.
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USD/JPY sits near 144.55/60 in early Wednesday dealings, slightly up from late Tuesday lows in NY trade. We spent yesterday largely wedged between 144.00 on the downside, while moves to 146.30/40 capped us on the topside. Yen lost a modest 0.11% for Tuesday's session.

  • Broader USD sentiment was mixed, with EUR and GBP lower as well, but higher beta FX rose in line with the better global equity tone (SPX and Nasdaq both up +1%), as sentiment stabilized somewhat following the recent rout.
  • The US Tsys curve steepened, with futures approaching pre US NFP levels from last week. This helped stabilize US-JP yield differential levels, albeit still close to multi month lows.
  • The bounce off Monday lows for USD/JPY has provided a sense of stability in the pair, but prices remain at risk of a resumption of the short-covering JPY rally, with both leveraged funds and asset managers still maintaining a deep net short JPY position.
  • Tech level wise, note that the pair is in an extreme oversold condition, however a clear reversal pattern / signal in price is required to highlight a change in direction. Initial resistance is seen at 146.66, the Aug 5 high. Key support is seen at 140.25 the Dec 28 low from last year.
  • The data calendar has the coincident and leading indices out today (not a market mover). We also have BoJ Rinban ops on tap.
  • The BoJ, FinMin and Financial Services Agency met late yesterday, seeking to reassure market confidence, although no concrete policy actions emerged. BoJ Governor Ueda is also scheduled to appear before parliament either this week or next, where the latest BoJ actions will be examined by lawmakers in light of the sharp swings in local equities and other asset markets.