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MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
JPY
USD/JPY broke above key resistance points post the Asia close on Thursday in the high 137 region to make fresh YTD highs. We currently track just below NY session highs, the pair last in the 138.65/70 region, with the yen losing 0.75% for Thursday's session. The yen has now fallen in 9 out of the last 10 trading sessions.
- Technically, Thursday’s break strengthens bullish conditions and confirms a resumption of the uptrend that started on Jan 16. The focus is on 139.00 and 139.59, a Fibonacci retracement. On the downside, initial firm support is seen at 135.22, the 20-day EMA. Key support is far off at 133.50, the May 4 low.
- USD/JPY is moving in sync with US-JP 10yr swap spreads, see the chart below. The correlation for the past month is back to 80%, 94% for the past two weeks, between the two series.
- Japan 10yr swap rates have moved back down towards the top end of the YCC ceiling, last around ~0.565% (mid April highs were around 0.68%). 10yr government bond yields are back to 0.38%. At face value, neither rate is suggesting an imminent shift in BoJ's policy stance (or tweaks to YCC).
- On the data front today, we have Apr CPI, which is expected to show further y/y momentum. Headline is forecast at 3.5%, 3.2% prior, while core (ex food and energy) is expected at 4.2%, prior 3.8%.
Fig 1: USD/JPY Trending Higher With US-JP 10yr Swap Differentials
Source: MNI - Market News/Bloomberg
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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