Yen Outperformed Friday But USDJPY Starts Week Above 145

The yen outperformed in the G10 space on Friday as it strengthened on the lower-than-expected US PPI data. USDJPY spiked to 145.57 pre-PPI and then fell to 144.36 following it. It closed off this low to be down 0.3% at 144.92, helped by safe haven flows related to escalating tensions in the Middle East. The USD index rose 0.1%. USDJPY has started the week 0.2% higher at 145.23.

• USDJPY broke through resistance at 145.97 last Thursday, which has undermined the recent bearish trend and there is now scope for it to move higher. Resistance at 147.32, December 7 high, has now opened up with key short-term support at 143.42.
• EURJPY trended lower on Friday and then stabilised during the NY session. The pair finished 0.5% lower at 158.68, close to the intraday low of 158.55, but has started today’s session +0.1% to 159.91. A bullish theme continues with initial resistance at 160.18, January 11 high, and key support at 157.21, January 9 low.
• The BoJ will conduct Rinban Operations covering 1-3-year and 5-25-year JGBs. The Nikkei opened up 0.2%.
• Our policy team in Tokyo expects the BoJ to move in April but there is significant uncertainty regarding the main interest rate target.
• M2 and M3 growth for December were steady at 2.3% y/y and 1.7% respectively.
• This week there are PPI, orders and IP data but the focus is likely to be on December CPI on Friday.