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Yen Goes Offered On Hawkish Fedspeak

JPY

Comments from Fed Governor Waller have lent support to USD/JPY early on, with the official playing down the significance of the latest U.S. CPI reading and noting that "we've still got a ways to go" before halting rate hikes. The yen lags all its G10 peers at typing.

  • Fed outlook remains a key driver of USD/JPY, with the Bank of Japan expected to keep its ultra-loose monetary policy settings unchanged for the time being. The reaction to Waller's comments may have been accentuated by thin morning liquidity.
  • China's announcement of measures to rescue its beleaguered real estate sector has supported sentiment to a degree, possibly reducing demand for the region's go-to safe haven currency.
  • USD/JPY risk reversals retreated last Friday, with a further shift towards yen calls observed this morning. One-month skews are at a new monthly low, while one-year skews are near multi-week lows touched last Friday.
  • The spot rate deals at Y139.59, up 79 pips on the day, after failing to come into contact with the Y140.00 mark. A clearance of that round figure would bring the 50-DMA at Y145.37 into play. Bears look for losses past Aug 23 low of Y135.82.
  • The BoJ will conduct 1-3, 5-10 & 25+ Year Rinban operations today. The yield on benchmark 10-Year JGBs fell below the central bank's 0.25% cap last Friday.
  • Local data highlights this week include flash GDP & final industrial output (Tuesday), trade balance (Thursday), as well as CPI (Friday).
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Comments from Fed Governor Waller have lent support to USD/JPY early on, with the official playing down the significance of the latest U.S. CPI reading and noting that "we've still got a ways to go" before halting rate hikes. The yen lags all its G10 peers at typing.

  • Fed outlook remains a key driver of USD/JPY, with the Bank of Japan expected to keep its ultra-loose monetary policy settings unchanged for the time being. The reaction to Waller's comments may have been accentuated by thin morning liquidity.
  • China's announcement of measures to rescue its beleaguered real estate sector has supported sentiment to a degree, possibly reducing demand for the region's go-to safe haven currency.
  • USD/JPY risk reversals retreated last Friday, with a further shift towards yen calls observed this morning. One-month skews are at a new monthly low, while one-year skews are near multi-week lows touched last Friday.
  • The spot rate deals at Y139.59, up 79 pips on the day, after failing to come into contact with the Y140.00 mark. A clearance of that round figure would bring the 50-DMA at Y145.37 into play. Bears look for losses past Aug 23 low of Y135.82.
  • The BoJ will conduct 1-3, 5-10 & 25+ Year Rinban operations today. The yield on benchmark 10-Year JGBs fell below the central bank's 0.25% cap last Friday.
  • Local data highlights this week include flash GDP & final industrial output (Tuesday), trade balance (Thursday), as well as CPI (Friday).