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MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
JPY
Yen finished down slightly against the USD for Wednesday's session, comfortably the worst performer in the G10 space. The USD suffered broad losses elsewhere, as the BBDXY fell 0.25%, the DXY off 0.36%, following a series of poor US data prints. USD/JPY tracks near 161.60 in early Thursday dealing.
- Initially, USD/JPY rose to a fresh cycle high at 161.95 ahead of the US data prints, before pulling back a touch. With longer-dated US yields extending as much as 8-9bps lower, post the US data prints (the ISM Services was notably weak), USDJPY had a sharp move to the downside, briefly reaching 160.78.
- However, in contrast to other G10 pairs, the greenback bounced back strongly, with USD/JPY eventually rebounding nearly 100pips.
- For USD/JPY the technical backdrop remains unchanged, with Fibonacci projections at 162.21 the upside target, while the 20-day EMA is back near 159.07.
- We continue to see divergence between USD/JPY and US-JP yield differentials, see the chart below. This may bring intervention risks into fresh focus, although language used by officials in the past week hasn't appeared to represent a step up in rhetoric around FX.
- Key crosses like EUR/JPY and AUD/JPY are in overbought territory re RSIs (14), along with USD/JPY itself, although for USD/JPY the overbought signal was stronger in late April.
- On the data front today we have weekly investment flows.
- The 2024 pay deal concluded, with a 5.1% wage gain, the strongest in 33 years, see this BBG link. There was still a disparity between outcomes for large and small firms.
Fig 1: USD/JPY Verus US-JP Yield Differentials
Source: MNI - Market News/Bloomberg
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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