AUSTRALIA DATA: Q4 Wages Forecast At 0.8%q/q, 3.4%y/y, RBA Forecast 3.4% As Well

The USD/JPY Friday night range was 157.82 - 158.40, Asia is currently trading around {USDJPY Curncy}. USD/JPY drifted lower on Friday, it is pretty interesting that it managed this while US Yields looked to be breaking higher through some pivotal areas. The BOJ remains in a tough spot, and their verbal push back increased dramatically last week, can they provide anything of substance at the BOJ meeting this week? A test of the BOJ/MOF resolve continues to look likely as the market moves its focus back toward the important 160.00 area. In today's Asian session, first support is toward the 157.00-157.50 area as dips should continue to be supported as we approach the BOJ this week. CFTC Data showed quite a large increase in Leveraged fund Yen shorts as we approach the meeting, see Graph below.

• Bloomberg - “BOJ Keeps Yen Watchers on Edge for Rate-Hike Clues. The upcoming Bank of Japan meeting offers scope for sharp movements in the yen as investors try to gauge the timing of its next hike — with a looming election adding to the confusion. That means Governor Kazuo Ueda will need to tread carefully during a post-decision press conference to ensure that the widely expected outcome doesn’t trigger another yen selloff.” 
• Bloomberg - “China has started requiring exporters of rare earths to Japan to submit additional documents with more detailed information, including supply chains, Kyodo reported.”
• CFTC Data of last week shows Asset Managers continue to pare back their JPY longs, +30177(Last +47852). The Leveraged community has aggressively increased their own shorts heading into the BOJ, -103741k(Last -68117).
• Options : Close significant option expiries for NY cut, based on DTCC data: 156.00($450m), 159.00($1.48b), 160.00($551m). Upcoming Close Strikes : 155.00($1.26b Jan 20), 156.30($1.25b Jan 22), 1598.50($1.4b Jan 21) - BBG.
• The USD/JPY Average True Range(ATR) for the last 10 Trading days: 81 Points
• Data/Event : Core Machine Orders, Industrial Production

Fig 1 : USD/JPY Spot Daily Chart

Source: MNI - Market News/Bloomberg Finance L.P

Source: Bloomberg Finance L.P./MNI 

The NZD/USD had a range Friday night of 0.5742 - 0.5767, Asia is trading around {NZD Curncy}. The NZD topped out with US Yields attempting to break higher and a new set of Tariffs over the weekend providing headwinds for risk sentiment. The NZD has technically put in what looks like a top around 0.5850 and while this continues to cap it should imply bounces are faded. The strength of the recent data is starting to mount though and is something to keep in mind. On the day, the NZD bears will continue to look for sellers again back toward 0.5770-0.5790 hoping any bounce will be capped below the pivotal 0.5800-0.5850 area in order to test the 0.5700 support again.  

• Bloomberg) -- “New Zealand Prime Minister Christopher Luxon’s state-of-the-nation speech will focus on a direction for the country and potential ways to build on the economic recovery now under way, according to his interview with NewstalkZB.”
• Bloomberg - “Scott Bessent emphasized the US won’t back down from taking over Greenland, saying the EU is too weak to ensure its security.”
• CFTC Data of last week shows Asset Managers again increasing their short positions in the NZD, -45756(Last -40649). The Leveraged community slightly reduced their own shorts, -10133(Last -10605).
• Options : Closest significant option expiries for NY cut, based on DTCC data: 0.5735(NZD300m), 0.5895(NZD300m). Upcoming Close Strikes : 0.5650(NZD343m Jan 22), 0.5740(NZD692m Jan 22) - BBG
• The NZD/USD Average True Range for the last 10 Trading days: 33 Points

Fig 1: NZD/USD Spot Daily Chart

Source: MNI - Market News/Bloomberg Finance L.P