JPY: USD/JPY - Drifts Higher In A Quiet Session
The USD/JPY range today has been 155.43 - 155.77 in the Asia-Pac session, it is currently trading around 155.60, +0.10%. The pair has tried to move higher after its strong bounce from the lows seen in New York. The market is pricing in the fact that the Yen move looks like it could force the BOJ into action in December. This should keep the move that looked about to go parabolic a little more contained. Technically USD/JPY continues to look like it wants to test higher with the first big support back toward the 154-155 area seeing lots of demand on the first attempt. On the day I suspect we will consolidate, looking for sellers to reemerge back toward the 156.00-30 initially. First strong support remains in the 153.00-155.00 area.
- OMFIF printed a commentary on Japanese Foreign Exchange Policy: “The MoF feels it has to do something. Rather than Japan confronting its policy mix, the finance minister jawbones about the weak yen, threatens intervention and decries that markets are one-sided, disorderly and not reflecting underlying fundamentals. But while significant short positions may occasionally build up, trading in yen is not disorderly – business is getting done, liquidity is good and bid/offer spreads are narrow. Rather, markets are reflecting fundamentals and voting on Japanese economic policy. Ultimately, the weak yen in significant part reflects Japanese policy incoherence.” https://www.omfif.org/2025/12/japanese-foreign-exchange-policy-riddled-in-contradictions/
- MNI AU - A BoJ Hike Fully Priced By March With Two Hikes By October 2026:
- BOJ Governor Kazuo Ueda said Monday that even if the policy rate were raised to 0.75% from 0.50%, overall financial conditions would remain accommodative.
- "JAPAN’S 30-YEAR YIELD HITS FRESH RECORD HIGH SINCE 1999 DEBUT" - BBG
- Options : Close significant option expiries for NY cut, based on DTCC data: 155.00($2.59b),156.00($885m), 156.50($951m). Upcoming Close Strikes : 153.00($1.2b Dec 4), 155.00($1.4b Dec 5), 155.50($1.11b Dec 3) - 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
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AUSSIE 10-YEAR TECHS: (Z5) Returns Lower
- RES 3: 95.982 - 76.4% retracement Sep’24 - Nov’24 downleg
- RES 2: 95.960 - High Apr 7 (cont.)
- RES 1: 95.900 - High Oct 17
- PRICE: 95.670 @ 16:16 GMT Oct 31
- SUP 1: 95.510 - Low Sep 3
- SUP 2: 95.415/95.300 - Low May 15 / Low Jan 14
- SUP 3: 95.275 - Low Nov 14 (cont) and a key support
Aussie 10-yr futures slipped lower Wednesday on the back of hotter-than-expected Australian inflation. This returned prices lower despite nascent signs of a technical recovery as recently as last week. The sustainability of the pullback will be dependent on prices holding above key short-term support at 95.510, the Sep 3 low. Near-term resistance remains 95.780, the Sep 12 high. A clear break of this level signals scope for a continuation higher and opens 95.960, the 76.4% retracement level for the Sep’24 - Nov’24 downleg.
AUSSIE 3-YEAR TECHS: (Z5) Struck by Strong CPI
- 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: 96.375 @ 16:13 GMT Oct 31
- SUP 1: 96.280 - Low May 15 (cont.)
- SUP 2: 95.900 - Low Jan 14 (cont.)
- SUP 3: 95.760 - Low 14 Nov ‘24
Having bounced well on the back of the mild US CPI print, Aussie 3-yr futures reversed course Wednesday on strong domestic inflation data containing RBA cut pricing through 2026. This keeps prices well below prior resistance at 96.615, the Sep 12 high, and refocuses attention on 96.280 as the next major support.
FED: Gov Waller: Still Advocating For A December Rate Cut
Gov Waller, one of the FOMC's more prominent doves, makes clear in an appearance on Fox Business that he supports a follow-up rate cut in December. He makes reference to Chair Powell's press conference comment that the Fed could skip a cut at the December meeting due in part to a lack of official government data during the federal shutdown (Powell: “what do you do if you are driving in the fog? You slow down").
- Waller says today: "Right now, we know that the labor market has been weak... We know inflation is going to come back down. Inflation expectations are anchored, and in that world, the standard of central bank wisdom is to look through it and proceed with worrying about the labor market. So in my view, we should just look at what the data is telling us and proceed on policy that way.... So this is why I'm still advocating that we cut policy rates in December, because that's what all the data is telling me to do. The fog might tell you to slow down. It doesn't tell you to pull over to the side of the road. You still have to go. You may want to be careful, but it doesn't mean to stop, and ... the right thing to do with policy is to continue cutting."
- This is of particular interest since he appeared to suggest he would have a more cautious outlook on further easing after cutting in October.
