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USDJPY Posts Impressive 225-Pip Range, Antipodean FX Rallies With Equities

FOREX
  • The USD index remains close to unchanged on Friday with very little newsflow or data driving specific momentum across G10 currency markets. An initial surge for USDJPY contributed towards broad greenback strength in early US trade, however the late rally for major equity indices prompted broad USD weakness and saw the DXY trade from highs of 102.50 all the way back to 102 approaching the week’s close.
  • USDJPY boasted an impressive recovery off the overnight 128.36 lows to trade as high as 130.61. Despite the lack of news trigger, the BOJ were very active again in yield curve control overnight, upping their purchase operations toward shorter maturities and appearing largely unfazed by the rip higher in core CPI overnight, which rose to a 41 year high.
  • As the dust settled on the move, equities traded with a very positive tone, with most major indices extending above Thursday’s highs and eating into the sizeable weekly declines.
  • Perky risk sentiment bolstered the likes of AUD and NZD with the latter rising 1.2% and erasing the entirety of the post Ardern resignation announcement losses from the prior day. NZDJPY is posting a 2.1% advance on Friday.
  • The Euro was much more subdued and a moderate dip down to the 1.0800 mark found solid support back to the highs of the day ~1.0860. Topside focus remains on 1.0913, a Fibonacci projection amid a number of sell-side analysts upgrading their EURUSD forecasts over the past fortnight.
  • Worth noting that not only do the Fed enter their blackout period before the Feb 01 meeting, China will also be out all next week for Lunar New Year. Highlights on the docket next week include the Bank of Canada decision as well as the first reading of Q4 US GDP.
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