JPY: USD/JPY - Pressing Support, A Break Will Return Focus To 140.00
May-19 22:50
The overnight range was 144.67 - 145.22, Asia is currently trading around 144.90. US Stocks had an impressive bounce and seemed to have looked through the US downgrade. USD/JPY though remains anchored to its lows as the USD could not bounce and has traded heavily across the board.
- Reuters reported - “Nippon Steel plans to invest $14 billion in US Steel if the Trump administration approves the merger of the companies.”
- Bloomberg - “The Bank of Japan is holding meetings with market participants to gauge their views on quantitative tightening and the pace of its pullback from the bond market.”
- “The discussions will inform the bank's decision on debt purchases at its next policy board meeting on June 16-17, amid a recent surge in super long bond yields and increased volatility.”
- “The BOJ's campaign to unwind its massive monetary easing program aims to restore the health of the debt market's functionality, with Governor Kazuo Ueda seeking to improve market functionality and reduce the bank's footprint.”
- USD/JPY continues to test its support and trade heavy towards its lows, the price action is interesting considering the bounce in stocks.
- The support around 144/145 looks important now and a break would once again bring the focus back to the pivotal 140.00 area. The price action does not look great and the market is still more comfortable selling rallies.
Options : Closest significant option expiries for NY cut, based on DTCC data: 145.50($1.03b May 20), 145.00($789.7m May 20) , Upcoming Strikes : 145.00($2b May 23),144.00($1.37b May 23), 140.00(1.67b May 23)
Fig 1 : USD/JPY Spot Daily Chart
Source: MNI - Market News/Bloomberg
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JGB futures are stronger, +18 compared to settlement levels, sitting near the middle of the range after a choppy session.
- “Governor Kazuo Ueda reiterates his stance that the central bank will carefully monitor if its economic outlook will be realized, accounting for the effects of US tariff measures, without preconception. The BoJ will raise the benchmark rate if the outlook is realized, Ueda says in response to questions in parliament.” (per BBG)
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