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FOREX: Yen Losses Further Ground, Steady Trends Elsewhere

FOREX

Yen losses have dominated G10 trade so far in Wednesday trade. The yen losing nearly 0.80% against the dollar, USD/JPY last near 153.65/70. Other moves have been much more modest in the G10 space. Outside of some modest NZD gains, most pairs sit close to flat. The BBDXY has ticked up on account of yen weakness, the USD index last around 1301.50.

  • Yen weakness has likely been driven by the firmer core yield backdrop. These trends have continued in Asia Pac markets today, although US Tsy yield gains are not much beyond 1bps at this stage. US-JP 10yr government bond yield differentials also haven't ticked higher so far today.
  • Onshore Japan markets have returned today, so there may also be some catch USD demand in play. BoJ Governor Ueda appeared before parliament earlier, noting there is a risk that higher food inflation impacts inflation expectations more broadly. Ueda reiterated that further hikes will depend on the economy and price developments.
  • Current USD/JPY post levels are close to option expiry levels for NY cut later on Wednesday (Y153.50-70($1.7bln). The 50-day EMA resistance point rests above 154.00.
  • AUD/USD is little changed last near 0.6300, close to its 50-day EMA resistance zone. Hong Kong equities are higher, although trends elsewhere (including in China) are more mixed. NZD/USD is marginally higher at 0.5660. NZD/JPY has tested above 87.00, but hasn't been able to sustain such gains so far. AUD/JPY is already above this resistance point.
  • Looking ahead, Fed Chair Powell testifies to the House financial services committee and the Fed’s Bostic and Waller also speak. January US CPI prints and Bloomberg consensus is expecting no change in the headline at 2.9% but for core to ease 0.1pp to 3.1%. January budget and real earnings data are also out. The ECB’s Elderson speaks at an MNI Connect event and BoE’s Greene appears.
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Yen losses have dominated G10 trade so far in Wednesday trade. The yen losing nearly 0.80% against the dollar, USD/JPY last near 153.65/70. Other moves have been much more modest in the G10 space. Outside of some modest NZD gains, most pairs sit close to flat. The BBDXY has ticked up on account of yen weakness, the USD index last around 1301.50.

  • Yen weakness has likely been driven by the firmer core yield backdrop. These trends have continued in Asia Pac markets today, although US Tsy yield gains are not much beyond 1bps at this stage. US-JP 10yr government bond yield differentials also haven't ticked higher so far today.
  • Onshore Japan markets have returned today, so there may also be some catch USD demand in play. BoJ Governor Ueda appeared before parliament earlier, noting there is a risk that higher food inflation impacts inflation expectations more broadly. Ueda reiterated that further hikes will depend on the economy and price developments.
  • Current USD/JPY post levels are close to option expiry levels for NY cut later on Wednesday (Y153.50-70($1.7bln). The 50-day EMA resistance point rests above 154.00.
  • AUD/USD is little changed last near 0.6300, close to its 50-day EMA resistance zone. Hong Kong equities are higher, although trends elsewhere (including in China) are more mixed. NZD/USD is marginally higher at 0.5660. NZD/JPY has tested above 87.00, but hasn't been able to sustain such gains so far. AUD/JPY is already above this resistance point.
  • Looking ahead, Fed Chair Powell testifies to the House financial services committee and the Fed’s Bostic and Waller also speak. January US CPI prints and Bloomberg consensus is expecting no change in the headline at 2.9% but for core to ease 0.1pp to 3.1%. January budget and real earnings data are also out. The ECB’s Elderson speaks at an MNI Connect event and BoE’s Greene appears.