JPY: JGB Stability Facilitates Yen Rebound, March BOJ Decision Eyed
Feb-10 12:02
- Japanese assets have firmed on Tuesday, bolstered by comments from Finance Minister Katayama, who appears to have successfully calmed the markets on the timing and financing of the sales tax cut. Katayama said that PM Sanae Takaichi has made it clear that the tax cut is strictly limited to two years, will not rely on debt issuance and will apply only to food and beverages.
- Stabilisation across the JGB curve has facilitated an extension of the Japanese yen rebound, with the USDJPY pullback from yesterday’s post-election high briefly reaching 1.72% at today’s 155.05 low. Price action increasingly blurs the technical picture, as spot is cleanly below through the 50-day EMA which may bolster the short-term bearish outlook. The 100-day MA intersects at 154.52.
- While the broader dollar weakness may have played its part in exacerbating the USDJPY price action, analysts have noted that the next meaningful leg lower might require a BOJ tightening impulse. We pointed out last week that JP Morgan read the latest BOJ minutes as hawkish, and that with some political stability post-election they believed the BOJ could hike in March, which could also lead to some shift in local flow dynamics.
- A BOJ rate hike in March remains feasible as real interest rates remain low and the risk of falling behind the curve persists, former BOJ chief economist Toshitaka Sekine told MNI on Friday. Furthermore, PM Takaichi has been taking market concerns over inflation and fiscal sustainability seriously and will not interfere with the BOJ’s gradual policy tightening from the current 0.75%, MNI understands.
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AUSSIE 3-YEAR TECHS: (H6) Recovery Mode
Jan-10 22:45
- RES 3: 97.796 - 1.618 proj of the Sep 3 - 12 - 15 price swing
- RES 2: 96.780 - High Jun 26 (cont)
- RES 1: 96.700 - High Sep 12
- PRICE: 95.890 @ 16:40 GMT Jan 9
- SUP 1: 95.740 - Low Dec 22
- SUP 2: 95.480 - Low 1st Nov ‘23
- SUP 3: 94.932 - 1.0% 10-dma envelope
Prices bounced again Thursday, supported by strength in global bond markets and a smoother inflation picture at the December CPI print. As such, prices edged further away from recent lows. Nonetheless, slower pricing for additional RBA easing - and partial pricing for a return to rate hikes in 2026 - should keep the front-end of the curve under pressure. This keeps prices well below prior resistance at 96.615, the Sep 12 high, and refocuses attention on 95.480 as the next major support.
MNI: MNI TEST 02, Please Ignore
Jan-09 23:36
Test Test TEST
MNI: MNI Test, Please Ignore
Jan-09 23:30
Test, ignore
