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Yen Firmer Ahead Of BoJ Nomination But Implied Vols Well Below Mid Jan Highs

JPY

Yen is trading with a firmer bias in the first part of trade, albeit within recent ranges. We are close to session lows near 132.00 (last 132.05/10), around 0.25/0.30% firmer in yen terms for the session. In terms of recent ranges, the pair has been supported post the recent US payrolls print on moves back into the 130.00/131.00 region, while the topside has capped out close to 133.00.

  • The yen didn't react a great deal to the downside miss on Q4 GDP earlier, with focus all on the BoJ Governor nomination coming up soon.
  • Overnight implied vols for USD/JPY are higher, last around 27.40%, but this is well below mid Jan highs of +54%, which coincided with the last BoJ policy meeting. It's similar in the 1 week space, where close to 15% is up off late Jan/early Feb lows, but well below mid Jan highs.
  • Option markets aren't implying fireworks at this stage.
  • The slightly offered tone to US equity futures is likely helping yen at the margin.

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