JPY: USD/JPY - Chops Around 159.00 As Peace Talks Loom

The USD/JPY range today has been 157.92-158.39 in the Asia-Pac session, it is currently trading around 158.25, +0.15%. The pair has moved back above 158.00 and is looking to regain its upward momentum. A sustained move above 158.00 and the market will again be looking toward the 160.00 area and then beyond, the jaw-boning by officials has started to increase and for the moment the market is wary but personally I don’t see them coming in until we see levels above 160-162 to force them to contemplate coming in. On the day, the first support is back toward 157.30-156.80 and then the 155.50-156.00 area.

• MNI AU - Japan Feb PPI Below Forecasts, But Import Y/Y Pace Strongest Since 2024: Japan's Feb PPI was weaker than forecast, falling 0.1%m/m (versus 0.2% forecast and 0.2% prior). In y/y terms we eased to 2.0%, against a 2.2% forecast and prior 2.3% outcome. The Feb print may be discounted to some extent, given the surge in energy prices since the end of Feb due to the Iran conflict.
• MNI AU - Import Price Pressures May Build Given Oil Spike, Weaker Yen: The spike in oil prices, if sustained, is likely to feed through into higher Japan imports in coming months. We observed the sharp rises seen in 2022, following the Russian invasion of Ukraine and the spill over to higher energy prices then.
• "JAPAN'S AKAZAWA: JAPAN CAN RELEASE OIL RESERVES ON ITS OWN, WILL TAKE NECESSARY MEASURES TO RESPOND TO OIL PRICES" - BBG
• Options : Close significant option expiries for NY cut, based on DTCC data: 155.00($1.03b). Upcoming Close Strikes : 156.00($1.01b March 13), 156.00($1.29b March 16) - BBG.
• The USD/JPY Average True Range(ATR) for the last 10 Trading days: 90 Points

Fig 1 : USD/JPY Spot Daily Chart

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

The AUD/USD has had a range today of 0.7113-0.7175 in the Asia- Pac session, it is currently trading around 0.7175,+0.75%. Oil has slipped lower again as IEA proposes to release strategic reserves, this together with a number of banks calling for a rate hike in both March and May has just added to the AUD tailwinds.  Price action remains pretty messy in markets at the moment with very conflicting views on length and outcomes of the Iran conflict. The demand for AUD though has been pretty consistent right through, while it holds above 0.6900-0.6950 the bulls will continue to remain in charge. I do still struggle to see how this is an environment for risk to outperform and I feel you will need this backdrop for the AUD to break and extend above the pivotal 0.7200-0.7300 area. The market bringing forward the rate hikes is certainly providing it with strong tailwinds though and it feels a strong challenge is imminent. On the day, I would be looking for dips to be supported toward 0.7100 first but ultimately more chopping around within this 0.6900-0.7200 range as the conflict continues. A close above 0.7200 and technically you would have to start considering another leg higher, CTA’s and momentum funds will not be holding back, the Asset managers have also clearly been using the dips to build their newly formed longs.

• MNI AU -  Westpac Now Forecasting +25Bps In March & May: Local bank Westpac is now penciling in +25bps moves at the March and May policy meetings, taking the peak cash rate to 4.35%t. NAB is also forecasting the RBA to hike in March and May, while late yesterday BoFA penciled in a March hike, while earlier today UBS did the same. This follows some hawkish remarks from RBA Deputy Governor Hauser in a podcast late yesterday, while Governor Bullock also stressed recently the March meeting was live. As Westpac notes below, the key shift has been the surge in oil prices, along with the RBA view of limited spare capacity.
• CFTC Data up to 03/03/2026 shows Asset managers starting to add quickly to their recent longs, +29956(Last +11621). The Leveraged community pared back a little of their already significant longs, +52382(Last +61887).
• Options : Closest significant option expiries for NY cut, based on DTCC data: 0.7105(AUD586m). Upcoming Close Strikes : 0.6975(AUD1.12b Mar 12), 0.7100(AUD993m Mar 16) - BBG
• The AUD/USD Average True Range for the last 10 Trading days: 99 Points

Fig 1: AUD/USD spot Weekly Chart

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

Today’s 5-year JGB auction sent strong demand signals. The low price beat expectations at 99.81, while the bid-to-cover ratio edged up to 3.6886x from 3.0961x. Meanwhile, the tail narrowed to 0.01 from 0.03, suggesting a modest improvement in pricing tension.

• The result is better than the result seen at this month’s 10-year and last month’s poor 2-year auction.
• Overall, with an outright yield and the 2s/5s curve near cycle highs, today’s outcome will be seen a relief.
• In the aftermath, the 5-year sector is 2bps richer in afternoon trading.