Yen Loses Altitude Ahead Of FOMC Policy Review

Spot USD/JPY ground higher Monday, with pre-FOMC widening in U.S./Japan yield differentials exerting upwards pressure on the pair.

• The gap between yields on 2-Year U.S. Tsys & JGBs expanded 6.9bp, returning above the 450bp mark. 10-Year spread grew 3.6bp, flirting with 380bp. The yield on benchmark 10-Year JGBs remained below the BoJ's 0.25% ceiling.
• Another 75bp rate hike from the Fed is fully priced in, while the BoJ last week left its super-dovish monetary policy settings unchanged. Market activity surrounding the FOMC meeting will be a key driver of USD/JPY price action going forward.
• Data from Japan's MoF confirmed that the authorities intervened in currency markets last month to the tune of Y6.3tn, setting a new record. Officials repeatedly refused to clarify if they took action and signalled that stealth interventions were an option.
• USD/JPY last deals at Y148.67, down 4 pips on the day. Bears look for losses past Oct 27 low of Y145.11, while bullish focus falls on Oct 21 cycle high of Y151.95.
• The final reading of Jibun Bank M'fing PMI will cross the wires later today.