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JPY: Yen Outperforms On Lower Core Yields, USD/JPY Sub 20-Day EMA, PPI Today

JPY
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USD/JPY's pullback, which started late in Asia Pac trade on Wednesday, extended as far as 155.95, post the weaker than expected core US CPI print. We track around 156.40 in early Thursday dealings, after posting a 0.95% gain for Wednesday's session, the best G10 performer. 

  • For USD/JPY technicals, we are back sub the 20-day EMA support point, for the first time since Dec last year. The 50-day EMA is much further south, near 154.70 in terms of next major support zone (out of Wednesday intra-session lows). Yesterday's highs were at 158.08.
  • US-JP yield differentials tumbled post the softer US core CPI print, with Tsy yields off 10-15bps across the benchmarks. Japan yields will move lower today in response, but have a lower beta compared to US moves.
  • The global equity rally on Wednesday may have helped temper yen gains, but it ended up on all key crosses in the G10 space for the session. EUR/JPY is back to the low 161.00 region, although this is still up from recent lows around 160.00.  
  • BoJ rate hike odds sat above 70% for Jan yesterday, which kicked off yen gains, as Governor Ueda stated a decision on whether to raise rates will be made next week (echoing earlier comments from Deputy Governor Himino). This suggests next week's meeting is very much a live one.
  • Today on the data calendar we have the Dec PPI out. The market looks for a 0.4%m/m rise and 3.8% y/y gain, similar to Nov outcomes. 
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USD/JPY's pullback, which started late in Asia Pac trade on Wednesday, extended as far as 155.95, post the weaker than expected core US CPI print. We track around 156.40 in early Thursday dealings, after posting a 0.95% gain for Wednesday's session, the best G10 performer. 

  • For USD/JPY technicals, we are back sub the 20-day EMA support point, for the first time since Dec last year. The 50-day EMA is much further south, near 154.70 in terms of next major support zone (out of Wednesday intra-session lows). Yesterday's highs were at 158.08.
  • US-JP yield differentials tumbled post the softer US core CPI print, with Tsy yields off 10-15bps across the benchmarks. Japan yields will move lower today in response, but have a lower beta compared to US moves.
  • The global equity rally on Wednesday may have helped temper yen gains, but it ended up on all key crosses in the G10 space for the session. EUR/JPY is back to the low 161.00 region, although this is still up from recent lows around 160.00.  
  • BoJ rate hike odds sat above 70% for Jan yesterday, which kicked off yen gains, as Governor Ueda stated a decision on whether to raise rates will be made next week (echoing earlier comments from Deputy Governor Himino). This suggests next week's meeting is very much a live one.
  • Today on the data calendar we have the Dec PPI out. The market looks for a 0.4%m/m rise and 3.8% y/y gain, similar to Nov outcomes.