Yen Goes Offered With Fedspeak Under Scrutiny, Japanese GDP Up Today

Spot USD/JPY advanced yesterday after finding support near the 61.8% retracement of its Aug - Oct rally, with the latest rounds of Fedspeak inspiring participants to reassess FOMC tightening outlook.

• Fed Governor Waller played down the significance of the latest below-forecast reading of U.S. CPI as just a single data point and flagged the need for continued tightening. His comments lent support to the greenback, before Vice Chair Brainard said "it will probably be appropriate soon to move to a slower pace of [rate] increases."
• U.S. Tsy yields crept higher on Wallers comments before trimming their advance as Brainard spoke. U.S./Japan 2-year yield spread was 5.6bp wider come the end of play, while 10-year gap grew 3.9bp.
• Equity sentiment was mixed, with U.S. benchmarks finishing in the red after a volatile session and the VIX index up 5.37%.
• USD/JPY risk reversals bounced from monthly lows across the curve as the spot rate climbed on the assessment of Fed comments.
• Spot USD/JPY last sits at Y140.05, up 17 pips on the day. Bulls look for a rebound above the 50-DMA (Y145.33), while bears set their sights on the 61.8% retracement of the Aug - Oct upswing (Y138.64) & two prior daily lows (Y138.47/46)..
• Preliminary Q3 GDP data will be released out of Japan in short order, with final readings of September industrial output due later in the day.