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USD/JPY Tests Above Mid May Highs Amid Broad USD Gains, BoJ Bond Ops In Focus

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USD/JPY tracks near 156.70 in early Thursday trade, just off intra-session highs from Wednesday NY trade. Yen lost 0.40% in Wednesday's session, as most G10 currencies fell against the USD. The BBDXY USD index rose 0.25%, with US yields mostly higher, led by the front end (2yr up 4bps to 4.87%).

  • US yields saw spill over from EU moves, post a stronger than expected UK CPI. The FOMC minutes didn't produce a large reaction in the yield space though. "Participants noted disappointing readings on inflation over the first quarter and indicators pointing to strong economic momentum, and assessed that it would take longer than previously anticipated for them to gain greater confidence that inflation was moving sustainably toward 2%,” the minutes said.
  • Some officials also appeared willing to contemplate interest rate increases if conditions appear to worsen.
  • For USD/JPY, we pierced May 14 highs of 156.74, which leaves upside focus on 157.00, a Fib retracement level, while the May 1 high was at 157.99. The 20-day EMA is back at 155.25/30.
  • Locally today we have weekly offshore investment flows, along with preliminary PMI figures for May. There will also be some focus on BoJ bond buying ops.
  • The Nikkei newspaper reports that the majority of service providers (surveyed in March) would raises prices in April (see this link). Note we get National CPI figures tomorrow.
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USD/JPY tracks near 156.70 in early Thursday trade, just off intra-session highs from Wednesday NY trade. Yen lost 0.40% in Wednesday's session, as most G10 currencies fell against the USD. The BBDXY USD index rose 0.25%, with US yields mostly higher, led by the front end (2yr up 4bps to 4.87%).

  • US yields saw spill over from EU moves, post a stronger than expected UK CPI. The FOMC minutes didn't produce a large reaction in the yield space though. "Participants noted disappointing readings on inflation over the first quarter and indicators pointing to strong economic momentum, and assessed that it would take longer than previously anticipated for them to gain greater confidence that inflation was moving sustainably toward 2%,” the minutes said.
  • Some officials also appeared willing to contemplate interest rate increases if conditions appear to worsen.
  • For USD/JPY, we pierced May 14 highs of 156.74, which leaves upside focus on 157.00, a Fib retracement level, while the May 1 high was at 157.99. The 20-day EMA is back at 155.25/30.
  • Locally today we have weekly offshore investment flows, along with preliminary PMI figures for May. There will also be some focus on BoJ bond buying ops.
  • The Nikkei newspaper reports that the majority of service providers (surveyed in March) would raises prices in April (see this link). Note we get National CPI figures tomorrow.