FOREX: USD Firms, USD/JPY Challenging YTD Highs, CNH Outperforms Post Fix
Broader USD trends remain positive, although aggregate index moves are muted. The BBDXY index unable to sustain earlier highs above 1210, Cross asset moves are fairly modest at this stage, US Tsy yields up a touch (10yr around 4.17%), while US equity futures are close to flat. Regional equity trends are positive, but gains aren't large. Gold and silver aren't moving much, while oil is up but sub Thursday US session highs, Brent last $62.40/bbl. This all comes ahead of the key NFP print in the US later. A Supreme Court ruling on the legality of the Trump tariffs could also come later today US time.
- The main exception to USD upside is USD/CNH, which is holding near 6.9800 in latest dealings (session lows were at 6.9757), after the USD/CNY fixing set a fresh low since 2024 earlier. This is aiding CNH outperformance on key crosses. CNH/JPY is back above 22.53, not far from earlier 2026 highs above 22.54.
- USD/JPY is above Thursday highs, last 157.25/30 and testing 2026 highs to date (157.30). More important resistance will be eyed at 157.89 the Nov 20 high and bull trigger. Earlier data stronger than expected household spending but this didn't benefit the yen.
- There is over $700mn in option expiries for NY cut later at 158.00 strike, which may come into focus if we see an upside NFP later during the US session.
- Japan FinMin Katayama has spoken about risks of China's export controls on global supply chains and called for smooth trade flows (with earlier reports from Japan also pointing to delays on food export to China). The FinMin will also attend a critical mineral in the US.
- AUD and NZD are both down a touch, but remain above Thursday lows. AUD/USD last 0.6690/95, while NZD/USD was near 0.5740/45. Both currencies are slightly higher versus the yen so for in Friday trade, but this came after declines in Thursday trade for these crosses.
- EUR/USD is holding near 1.1650, while GBP/USD is off a touch to 1.3430.
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JPY: USD/JPY - Stalls Toward 157.00, Drifts Off Overnight Highs
The USD/JPY range today has been 156.56 - 156.94 in the Asia-Pac session, it is currently trading around 156.60, -0.20%. The pair has drifted lower in Asia after topping out towards 157.00. The move higher overnight was supported by the sell-off in treasuries which has seen yields move quite a bit higher as we approach the FOMC. The U.S. 10-Year yield is approaching the pivotal 4.20% area, a break of which could signal the start of a bigger move higher. The market has been pricing in the fact that the Yen move looks likely to force the BOJ into action in December. This has initially stalled the upward momentum but a hawkish cut from the FOMC tomorrow could potentially undo all that. Technically USD/JPY is in an uptrend, the first big support back toward the 153-155 area has held on very well upon first examination. On the day, look for support back toward 156.00-30, on the topside we should see some initial resistance around 157.00-30, a break above here and the next target is towards 158.00.
- Nick Timiraos on X: “Politico: Is it a litmus test that the new chair lowers interest rates immediately? Trump: Yes.”
- Jim Bianco on X: “As many as five of the 12 voting members of the Fed’s policy committee, and 10 of all 19 members, have signaled in speeches or public interviews that they didn’t see a strong case to cut.”
- "TAKAICHI: VITAL THAT FX MOVES STABLY, REFLECTING FUNDAMENTALS, WILL TAKE APPROPRIATE RESPONSE IF EXCESSIVE FX MOVES. WEAK YEN HAS BOTH MERITS AND DEMERITS FOR ECONOMY" - BBG
- Options : Close significant option expiries for NY cut, based on DTCC data: 155.50($592m), 156.00($900m). Upcoming Close Strikes : 155.00($1.13b Dec 12), 156.00($2.46b Dec 11), 159.00($1.55b Dec 12) - BBG.
- The USD/JPY Average True Range(ATR) for the last 10 Trading days: 94 Points
Fig 1 : USD/JPY Spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
BOJ: Rinban Purchase Offer
Today, the BoJ offered to buy a total of Y680bn of JGBs from the market:
- Y300bn worth of JGBs with 1-3 Years until maturity
- Y305bn worth of JGBs with 5-10 Years until maturity
- Y75bn worth of JGBs with 25+ Years until maturity
AUSSIE BONDS: Post-RBA Sell-Off Extends Ahead Of Tomorrow's Jobs Data
ACGBs (YM -6.0 & XM -5.0) have extended the sell-off that started during yesterday's RBA presser by Governor Bullock. As it stands, futures are 6-10bps weaker, with a flatter curve.
- Cash US tsys are ~1bp richer in today's Asia-Pac session ahead of today's FOMC policy decision. Inter-meeting communications reinforced that the FOMC is finely split between those who would ease further and those who are resistant - if not outright opposed - to providing further accommodation.
- Cash ACGBs are 3-4bps cheaper with the AU-US 10-year yield differential at +60bps.
- The bills strip has bear-steepened across contracts, with pricing flat to -6.
- RBA-dated OIS pricing is 1–8bps firmer across meetings today, extending yesterday’s post-press conference sell-off. Markets are pricing a steady build-up in tightening risk, with the implied probability of a 25bp hike rising from 36% in February to 97% by May and 219% by December 2026.
- The spread between the 1-year forward 3-month swap (1Y3M) and the 3-month rate—often used as a proxy for policy expectations a year ahead—has widened by more than 150bps since April, underscoring the magnitude of the shift in rate expectations (see chart).
- Tomorrow, the local calendar will see labour market data, with the market expecting +20k jobs but a higher unemployment rate (4.4% vs. 4.3% prior).
Figure 1: 1Y3M Swap Rate Vs. 3M Swap Rate
Source: Bloomberg Finance LP / MNI
