Yen Has Best Session Since Late 90's

Yen gains for the Tuesday session were around 4%, the strongest daily gain for the currency since the late 1990's. USD/JPY last tracked just above 131.80, against NY session lows of just under 130.60.

• From a technical standpoint, key support at 131.74 has now given way, opening losses toward late August lows of 130.41. The 55 week MA comes in at 130.20 as well. MA studies are in a bear-mode position. The daily RSI is nearing oversold territory, which could slow downside progress from here on, but the overarching theme remains negative for now.
• More broadly the focus will be on the potential for further BoJ shifts in 2023. The other point for markets will likely rest on whether 10yr government bond yields pressure the top end of the new band (0.50%). Swaps are already pointing to risks that way.
• This would likely help yen sentiment, although expect pushback from the BoJ via stepped up bond buying in Q1 next year.
• Today's data calendar is light, with just machine tool orders due later.