Jan 16, 2025 - 10:23 AM
FOREX: Yen Outperforming as January BOJ Meeting Nears
FOREX
- While G10 currencies trade mixed amid an unchanged Dollar index on Thursday, the focus remains firmly on the Japanese Yen and the significant market moves overnight. Assisting the prior session’s direction of travel, Bloomberg headlines crossed overnight, reiterating that the BoJ sees a good chance to hike rates next week absent a US shock.
- The report sends the strongest signal yet that the BoJ is preparing for a rate hike next week, bolstering the signals sent by BOJ Governor Ueda and Deputy Governor Himino earlier this week. The Japanese Yen rallied sharply during APAC hours, with USDJPY sinking from around 156.50 to a 155.21 low before recovering.
- While the latest move lower is considered technically corrective for now, the pair has traded through the 20-day EMA and the overnight extension narrowed the gap substantially to 154.90, the 50-day EMA.
- EURJPY (-0.45%) and GBPJPY (-0.77%) are notably pressuring the psychological pivots of 160.00 and 190.00 respectively, developing the bearish threats for both crosses.
- GBP is underperforming following the slightly weaker-than-expected UK activity data, which could marginally underpin growth concerns bolstering the Sterling bear trend. Cable briefly slipped back below 1.22, while EURGBP has advanced 0.3% to 0.8430 at typing. We highlight a bullish outlook for the cross, and see resistance at 0.8463 and 0.8494, the Aug 26 high.
- USDMXN stands out in emerging markets, rising 0.75% to 20.60 as the overnight equity gains and softer US CPI have been shrugged off. Focus turns to US retail sales, initial jobless claims and Treasury Secretary Nominee Scott Bessent faces his Senate confirmation hearing.
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