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USD/JPY Ticks Higher, Overnight Vol Back To Mid Dec Highs As BoJ Comes Into View

JPY

USD/JPY is continuing to creep higher, the pair last near session highs - 155.40/45. This is only marginally above end Wednesday levels in NY, but is a fresh cyclical high (back to 1990) in the pair.

  • FX rhetoric from FinMin Suzuki has crossed the wires: *SUZUKI: WATCHING FOREX MOVES CLOSELY (BBG), *SUZUKI: WILL TAKE APPROPRIATE ACTION AGAINST FX. He appeared before parliament. Chief Cabinet Secretary also noted that is it important for FX markets to reflect fundamentals (BBG).
  • We haven't seen any meaningful reaction in yen from these comments, as they appear to be in line with recent FX jaw boning. For USD/JPY, upside focus is likely to rest on 156.00.
  • Overnight vols have surged to 27.5%, as tomorrow's BoJ meeting comes into view. This is highs back to mid Dec last year. The implied 1 day range for USD/JPY is 152.92-157.87 (based off 76% probability).
  • 1 week vol is also higher, last at 13.62%, but also sub mid Dec 2023 highs. The 1 week risk reversal is back at -3.16, fresh lows back to July last year.
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