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Yen Goes Offered As Participants Reassess Intervention Risk, Prepare For BoJ Meet

JPY

Spot USD/JPY popped higher this morning, taking out its best levels from last week and refreshing a two-decade high. It last trades at Y134.67, up 26 pips on the day, after running as high as to Y134.73.

  • The Nikkei circulated a report citing comments made by ruling LDP policy chief Takaichi during here TV appearance, where she played down the appropriateness of an FX intervention at this point in time. She thus poured cold water on renewed speculation triggered by a statement released Friday by representatives of Japan's top financial authorities, who expressed concern about yen depreciation and pointed to a "wide variety of options" available if they need to take action.
  • On top of that, the next monetary policy decision from the BoJ is drawing near. The Bank is expected to reaffirm its ultra-dovish stance on Friday, defying the hawkish charge led by the world's major central banks. There will be no Outlook Report this time.
  • Friday saw some reduction in bullish bias among options traders, but USD/JPY 1-month risk reversal remains above par. Also worth noting that the rate's RSI is still running above 70, pointing to overbought technical conditions.
  • With the spot rate approaching the psychologically significant Y135.00 figure, bulls look for a break above there before targeting Y135.15, which represents Jan 31, 2002 and a key congestion area. Bears would be pleased by a pullback towards the 50-DMA at Y128.72.
  • Japan's Finance Ministry will publish Q2 BSI Survey today, with final industrial output, core machine orders & trade balance coming up later in the week.
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Spot USD/JPY popped higher this morning, taking out its best levels from last week and refreshing a two-decade high. It last trades at Y134.67, up 26 pips on the day, after running as high as to Y134.73.

  • The Nikkei circulated a report citing comments made by ruling LDP policy chief Takaichi during here TV appearance, where she played down the appropriateness of an FX intervention at this point in time. She thus poured cold water on renewed speculation triggered by a statement released Friday by representatives of Japan's top financial authorities, who expressed concern about yen depreciation and pointed to a "wide variety of options" available if they need to take action.
  • On top of that, the next monetary policy decision from the BoJ is drawing near. The Bank is expected to reaffirm its ultra-dovish stance on Friday, defying the hawkish charge led by the world's major central banks. There will be no Outlook Report this time.
  • Friday saw some reduction in bullish bias among options traders, but USD/JPY 1-month risk reversal remains above par. Also worth noting that the rate's RSI is still running above 70, pointing to overbought technical conditions.
  • With the spot rate approaching the psychologically significant Y135.00 figure, bulls look for a break above there before targeting Y135.15, which represents Jan 31, 2002 and a key congestion area. Bears would be pleased by a pullback towards the 50-DMA at Y128.72.
  • Japan's Finance Ministry will publish Q2 BSI Survey today, with final industrial output, core machine orders & trade balance coming up later in the week.