Yen Weakens Past Prior Intervention Levels, BoK Rate Decision Eyed In Asia

Yen sellers forced a breach of the Y145.90 level against the greenback, which provided a key layer of resistance for USD/JPY after triggering a currency intervention last month. The rate quickly retraced its initial foray beyond that figure, before posting another upleg at the Tokyo open, printing fresh 24-year highs at Y146.23 as a result. It then pared some gains to last oscillate around the Y146.00 mark. There have been no obvious headline catalysts behind those moves.

• After the Y145.90 level gave way, we can expect the return of stepped-up jawboning from Japanese officials and intervention guessing game from market participants. Japan's FX czar yesterday warned that he could order an intervention even aboard a flight. Technical focus turns to the 1998 high of Y147.66.
• Renewed gains for the broader U.S. dollar facilitated the upswing in USD/JPY. The BBDXY index trades on a firmer footing but is yet to test yesterday's high. The U.S. data docket for the next two days includes some key risk events, including FOMC minutes (Wednesday) and CPI (Thursday).
• Elsewhere, we are now on BoK watch with South Korea's central bank expected to raise the main policy rate by 50bp. Onshore won outperforms in emerging Asia, albeit USD/KRW 1-month NDF sits a tad higher.
• Other notable data releases today include UK economic activity indicators & EZ industrial output. Plenty of speeches are scheduled from Fed, ECB & BoE policymakers.