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JPY: Yen Underperforms USD Pullback, Despite Firmer BoJ Hike Odds

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USD/JPY tracked modestly higher post the Asia Pac close on Tuesday, getting to highs of 158.20. We sit a little softer now, last near 158.00, but yen still lost 0.30% for Tuesday's session, the worst performer in the G10 space. The rebound in EUR/USD was in focus, while EUR/JPY got back to 162.80/85, up 0.90%, and comfortably off recent lows near 160.00. 

  • For USD/JPY technicals, trend conditions are unchanged. Bulls still remain in the drivers seat, with upside focus on 158.87, the Jan 10 high. Initial firm support is 156.78, the 20-day EMA.
  • The generally positive tone to global equities for Tuesday, albeit with modest aggregate moves, likely weighed on yen against key crosses. Even the troubled pound managed a small rise against the USD for Tuesday's session.
  • US yields were mixed, softer at the front end, following the weaker than forecast US PPI. Back end yields held modest gains though, the 10yr near 4.79%. US-JP yield differentials have tracked sideways at the front end 2yr tenor and sit just off recent highs for the 10yr.
  • On the data front today, we have Dec money stock figures first up, then Dec preliminary machine tool orders. These prints are unlikely to shift market sentiment.
  • BoJ rate hike odds for next week's policy meeting are higher, last near 60%, up from recent lows around 40%. Yesterday Deputy Governor Himino noted a rate hike would be discussed at the meeting. “It is important for the BOJ to judge the timing of rate hike in an appropriate manner. But it is difficult for the bank to judge when the appropriate timing would be,” Himino said.
  • Still, these shifts haven't generated much yen support at this stage. 
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USD/JPY tracked modestly higher post the Asia Pac close on Tuesday, getting to highs of 158.20. We sit a little softer now, last near 158.00, but yen still lost 0.30% for Tuesday's session, the worst performer in the G10 space. The rebound in EUR/USD was in focus, while EUR/JPY got back to 162.80/85, up 0.90%, and comfortably off recent lows near 160.00. 

  • For USD/JPY technicals, trend conditions are unchanged. Bulls still remain in the drivers seat, with upside focus on 158.87, the Jan 10 high. Initial firm support is 156.78, the 20-day EMA.
  • The generally positive tone to global equities for Tuesday, albeit with modest aggregate moves, likely weighed on yen against key crosses. Even the troubled pound managed a small rise against the USD for Tuesday's session.
  • US yields were mixed, softer at the front end, following the weaker than forecast US PPI. Back end yields held modest gains though, the 10yr near 4.79%. US-JP yield differentials have tracked sideways at the front end 2yr tenor and sit just off recent highs for the 10yr.
  • On the data front today, we have Dec money stock figures first up, then Dec preliminary machine tool orders. These prints are unlikely to shift market sentiment.
  • BoJ rate hike odds for next week's policy meeting are higher, last near 60%, up from recent lows around 40%. Yesterday Deputy Governor Himino noted a rate hike would be discussed at the meeting. “It is important for the BOJ to judge the timing of rate hike in an appropriate manner. But it is difficult for the bank to judge when the appropriate timing would be,” Himino said.
  • Still, these shifts haven't generated much yen support at this stage.