JPY: USD/JPY-More BOJ Jaw-Boning Sees A Move To 158.00, Dips Remain Supported

The NZD/USD had a range today of 0.5771-0.5789 in the Asia-Pac session, going into the London open trading around {NZD Curncy}. The NZD traded sideways in a quiet session, consolidating its gains above 0.5700-0.5750. On the day, I suspect this sort of price action could continue as the pair settles into a range, support is back toward 0.5740-0.5760 and resistance is around 0.5810-30. 

• MNI AU - Q3 Current Account Deficit, As % Of GDP, Continues Improvement: The Q3 headline current account deficit widened to -NZD8.365bn, from, -NZD1.297bn in Q2, but this is part of the typical seasonal norms. In seasonally adjusted terms we were slightly wider in Q3 at -NZD3.8bn. As a percent of GDP, the deficit was -3.5% in YTD terms, slightly wider than the -3.4% forecast but still an improvement on the Q2 outcome of -3.7%. The deficit trend as a share of GDP continues to improve, we were at -9.0% of GDP at the end of 2022.
• MNI AU - Further Weakness In Whole Milk Prices, Back To Mid 2024 Levels: Overnight the GDT whole milk auction price fell sharply, down 5.7% on the prior outcome to $3161/mt. This is the lowest level since mid 2024 for the twice monthly auction outcome. The Q3 official terms of trade print for NZ showed a 2.1%q/q fall. We were still up 7.2% in y/y terms. Export prices are moving off earlier 2025 highs, consistent with lower whole milk auction price outcomes.
• Options : Closest significant option expiries for NY cut, based on DTCC data: 0.5780(NZD344m), 0.5800(NZD502m), 0.5850(NZD328m). Upcoming Close Strikes : 0.5630(NZD594m Dec 19), 0.5690(NZD531m Dec 18 ), 0.5860(NZD471m Dec 18 ) - BBG
• The NZD/USD Average True Range for the last 10 Trading days: 42 Points

Fig 1: NZD/USD Spot Daily Chart

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

• As equities perform better today, gold now turns its attention to US inflation data out Thursday whilst monitoring events in Venezuela as the US President orders a blockade of their sanctioned oil tankers.   
• With a raft of data to come including CPI for November, the future path for interest rates is most important to gold.  Weaker than expected non farm payrolls surprisingly didn't give gold a boost overnight given its correlations to interest rate expectations.  Some market observers suggesting that near term data may be disregarded given its delay in release during the government shutdown.
• Gold is up +0.50% today to US$4.323.68 and is now just under 1% below the October high of US$4,356.
• Moves higher today take gold into overbought territory where it spent much of September and October when trade war fears were at their peak.  However if the idea that gold may be impacted less than normal by US data holds true, then growing geo-political risks and equity volatility could mean that the risk is that gold could remain overbought for some time.  

The USD/JPY range today has been 154.52 - 155.03 in the Asia-Pac session, it is currently trading around {USDJPY Curncy}. The pair chopped around in a 50 point range without really going anywhere in Asia. The market is pricing in a hike by the BOJ for this week, for the time being this is keeping the JPY contained and confined to a wider 154.00-157.00 range having capped its upward momentum. Technically USD/JPY is in an uptrend, the first big support is back toward the 152.50-154.50 area. In today's Asian session, look for resistance back toward the 155.00-155.30 area initially, should this hold look for a retest of the 154.30-50 area at some point a break of which could signal a deeper pullback. A break above 155.20-30 and the price could move back toward 155.70-156.00. 

• MNI AU - MNI BOJ Preview: Hike Fully Priced For This Week: Executive Summary The BOJ is widely expected to raise the policy rate by 25bp to 0.75% at the December 18-19 meeting, with Governor Ueda's recent remarks signaling increased confidence in the outlook for growth, inflation and wage momentum. Ueda has indicated the BOJ will assess the "pros and cons of raising the policy interest rate," while Policy Board members say conditions for a hike are "gradually falling into place," though confirmation of spring wage momentum remains key.
• Beyond December, attention will focus on guidance around the neutral rate, which Ueda has described as "1-2.5%," signaling that policy normalisation is likely to continue gradually rather than end at 1%.
• Options : Close significant option expiries for NY cut, based on DTCC data: 153.75($950m), 156.00($760m). Upcoming Close Strikes : 157.00($4.15b Dec 18 ), 158.00($4.98b Dec 18 ), 159.00($6.46b Dec 18 ) - BBG.
• The USD/JPY Average True Range(ATR) for the last 10 Trading days: 101 Points

Fig 1 : USD/JPY Spot Daily Chart

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