Yen Remains In Free Fall, Greenback Rises With U.S. Tsy Yields

USD/JPY traded as high at Y120.07 into the Tokyo fix, printing above Y120.00 for the first time since early ’16 in the process, before backing off to trade below the figure once again. Note that several market participants have flagged broken barrier options at the Y120.00 level. BoJ policy divergence vs. wider developed market central banks, Japan’s notable reliance on energy imports (and the surge in related prices in recent weeks, resulting in diminished terms of trade for Japan) and the well-documented cheapening in U.S. Tsys (higher Tsy yields) have been the dominant inputs into price action for the cross during early ’22. Note that beyond the aforementioned early session high (Y120.07) bulls will target resistance in the form of the Feb 2 ’16 high (Y121.04).

• The greenback has caught a renewed bid along U.S. Tsy yields as the Asia session got underway, with the region catching up with latest hawkish comments from Fed Chair Powell. The official opened the door for a 50bp rate hike at the next FOMC meeting if required.
• The PBOC fix fell virtually in line with expectations. China's central bank set the midpoint of permitted USD/CNY trading band at CNY6.3664. Spot USD/CNH edged higher while staying within yesterday's range.
• Central bank speak takes focus today, in the absence of notable data releases. Comments are due from ECB's Lagarde, Lane, de Guindos, Villeroy & Panetta, Fed's Williams, Daly & Mester as well as Riksbank's Ingves & Skingsley.