Yen Weakness Continues, Fed Up Next

Outside of fresh yen weakness, overall G10 FX moves have been fairly muted. The BBDXY sits marginally higher, last near 1241, largely on account of fresh weakness.

• USD/JPY pushed through 151.00 in the first part of Wednesday trade. We have held above that level since and as we approach the cross over with EU/London the pair has hit fresh highs for the session at 151.45./50
• The is nearly 0.40% weaker in yen terms versus end levels in NY on Tuesday. Focus remains on 2023 highs at 151.91, although this may raise fresh intervention risks. Japan markets have been closed today for a local holiday, which has likely kept rhetoric absent.
• Depressed vol levels and the sharp push higher in risk reversals in the pair points to upside USD/JPY pressures, with markets not expecting an aggressive BoJ tightening cycle and still accommodative financial conditions.
• EUR/JPY continues to track higher, the pair last at 164.60, fresh highs back to 2008.
• NZD/USD is a little lower sub 0.6050, despite better current account data for Q4. We also had a rise in consumer confidence. We sit marginally above recent lows, while headlines crossed from the IMF stating there is scope for the RBNZ to cut later this year.
• AUD/USD has outperformed NZD at the margins, last near 0.6530, close to unchanged for the session. Higher commodity prices, coupled with weaker NZ dairy prices likely helping the move. The AUD/NZD cross is above 1.0800, to fresh highs back to late Jan.
• The main focus coming up later we will be the FOMC.