USD/JPY To Fresh YTD Highs, But Outperforms On Crosses

The yen is down around 0.90% for Tuesday's session, amid broad based USD gains post Powell's hawkish testimony. The currency fell the least against the USD for the session though (with AUD, NOK and SEL all falling by more than 2%). USD/JPY is back above 137.00, last near the 137.15 region. The simple 200-day MA is not too far away at 137.40, while mid Dec 2022 highs at 138.17 could also be targeted.

• At the margin the softer equity tone likely aided yen from a cross standpoint, while back end spreads against the USD aren't materially changed. The US-JP 10yr swap spread sits at +285bps, the same levels from Monday's close.
• Still, the yen saw meaningful spill over from higher front end rates in the US and broader USD gains.
• Locally, the data calendar is busy, although data out is unlikely to shift sentiment for the yen meaningfully. The Jan current account and trade balance figures are due. Bank lending figures for Feb are out as well. Later on, the leading and coincident indices print, as well as the Eco Watchers Survey.
• Friday's BoJ meeting is also coming into view. No major changes are expected in what will be Kuroda's last meeting. 1 week implied USD/JPY vols continue to track higher, last near 17.30%, highs back to mid-January. 1 week risk reversals are up slightly off recently lows, tracking near -3.50 currently.