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Yen Rallies On US Yield Pullback, BoJ Summary Of Opinions Out Today

JPY

Yen rallied post the as expected US CPI print. The pair was close to 135.40 prior to the print, before eventually pulling back to 134.10/15 by late NY trade. We sit slightly higher now, in the 134.30/40 region. Yen was the second best performer for Wednesday's session within the G10 space, gaining 0.66%.

  • Technically, recent weakness resulted in a break of the 20-day EMA and price pierced support at the 50-day EMA which intersects at 134.00. A clear breach of this EMA would undermine the recent bullish theme and signal scope for a deeper pullback. Note the May 5 lows comes in at 133.50. Key resistance is unchanged at 137.91, the Mar 8 high. Initial firm resistance is at 136.63, the May 3 high.
  • For the most part, intra-day yen moves are still following US yield momentum reasonably closely. The US 2yr yield settling back to 3.91% post the US CPI outcome (against earlier highs of 4.05/4.06%).
  • Locally, there is a host of Japan data releases today, with Mar trade figures and BoP out, along with Apr banking lending. Weekly investment figures are also due, as well as Apr Eco Watchers Survey. Also note the BoJ Summary of Opinions is out for Apr.
  • Two life insurance companies, Dai-ichi and Nippon are planning to cut UST holdings in favor of JGBs this fiscal year (see this link for more details). This has been a common theme among lifers in recent months.
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