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USD/JPY Testing 20-day EMA Downside Support, Q3 GDP Out Today

JPY

Yen gained around 0.90% for Tuesday's session, amid broad USD losses post the weaker CPI print. JPY only bettered CAD in the G10 space for the session, with buoyant equity risk appetite undermining yen performance on crosses. For USD/JPY we are back to 150.35/40, with Tuesday lows at 150.16.

  • USD/JPY pierced support at the 20-day EMA, 150.39. Such moves in recent months have ultimately proven USD buying opportunities. Key support is likely at 149.21 the Nov 3 and 148.97, the 50-day EMA. 151.95, the Oct 2022 high is a major resistance point on the topside.
  • The US-JP 10yr government bond yield differential is back to +359bps, near mid-September lows. There may be some stability as JGB yields fall today, but US moves will continue to dominate this spread.
  • JPY lost ground against the NZD and AUD for Tuesday, with both currencies up more than 2% against the USD.
  • On the data front today we have Q3 GDP. The market expects a modest q/q contraction (-0.1%, versus +1.2% prior).
  • In terms of option expiries, we have the following for Wednesday NY cut: Y148.90-00($1.7bln), Y150.00($1.2bln), Y151.27($783mln), Y152.00($2.3bln), Y152.25($691mln). Also note a $2.61bn at 150.00 expiry for Thursday NY cut.
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