FOREX: JPY Vols Tipped to New YTD High Ahead of BoJ Decision
Jan-23 09:51
- JPY markets remain of interest, with overnight vols capturing the Friday BoJ rate decision. Implied vol expiring Friday is bid, tipped up to 19 points for the first time since mid-December as markets anticipate a 25bps hike to 0.50% in Japan. JPY is suitably slightly firmer early Thursday, but price action is generally contained.
- USD/JPY is just below the Y156.50 mark at typing, with Y156.29 marking soft support ahead of the weekly (post-tariff headlines) low of Y154.78.
- The USD Index holds above the weekly low, but remains comfortably off the year's best levels. That said, the underlying uptrend remains in tact given the stabilisation above the 50-dma support this week. The upswing in near-term momentum remains a key driver here and notably the premium for the 50-dma over the 200-dma is at a new cycle high today (~2.8%) and the largest since late 2022.
- AUD and NZD sit slightly softer as global equities roll slightly off this week's highest levels. European stocks are in very minor negative territory into the NY crossover as prices roll off record highs, dragging risk sensitive stocks with it. Adding to the pressure here is gold prices, which are through yesterday's lows and prompting a softer precious metals backdrop.
- Weekly US jobless claims data and Canadian retail sales are the calendar highlights, although more attention will likely be paid to Trump's video-link appearance at the World Economic Forum in Davos - set for 1600GMT/1100ET.
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FOREX: FX OPTION EXPIRY
Dec-24 09:40
Of note:
EURUSD 1.31bn at 1.0400 (fri).
- EURUSD: 1.0400 (590mln).
- USDJPY: 157.00 (431mln).
- USDCNY: 7.2814 (600mln).
GILTS: Testing session low
Dec-24 09:32
- The UK 10yr Yield remains higher today, futures underperforms the US Treasuries.
- The Yield managed a 4.651% high this Month, the highest print since November 2023.
- Looking further out, the 2023 high is situated at 4.752%, this was also the highest print since late 2008.
- Today, reference 92.23, would equate to 90.72.
CROSS ASSET: MONTH END EXTENSION (update)
Dec-24 08:21
This should be a non event for Year End, they are small, and only the lower liquidity could get Govies moving, but unlikely, as investors turn their attention to 2025.
Bloomberg Bonds:
- US Tsys: +0.07yr (small, average).
- EU Govies: +0.04yr (small).
- UK Govies: -0.02yr (non event).
MS Bonds:
- US Tsys: +0.05yr (small).
- EU Govies: +0.03yr (small).
- UK Govies: To contract (non event).
Barclays FX:
- Their Quarter rebalancing model only shows a Weak Dollar Buying signal.
