JPY: USD/JPY - Yen Weakness Hits Pause For Now
The USD/JPY range today has been 155.45 - 155.77 in the Asia-Pac session, it is currently trading around 155.70, +0.05%. The pair continued to build on its move lower overnight in reaction to a dovish Fed. The market was clearly wrong-footed looking for a hawkish cut and has had to pare back those trades. The market has been pricing in the fact that the Yen move looks likely to force the BOJ into action in December. This together with a dovish Fed could be enough to halt the Yen falling out of bed for now. 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 155.90-156.20 area, should this hold, look for a retest of the overnight lows at some point and then another examination of the support below.
- MNI POLICY: BOJ To Keep Neutral, Terminal Rate View. The Bank of Japan will maintain its current 1-2.5% estimated range for the neutral interest rate following the next hike widely expected at the Dec. 18-19 meeting, and will continue to assess whether its policy rate remains appropriately accommodative using indicators such as bank lending, the Tankan survey and capital investment, keeping the door open for further rate hikes, MNI understands.
- Bloomberg - “Nomura strategists recommend buying the yen against the dollar as a key trade for 2026. They believe Japan’s government may resist prolonged currency weakness, citing potential tailwinds like narrowing rate differentials and an improving trade balance.”
- Options : Close significant option expiries for NY cut, based on DTCC data: 155.00($1.55b), 157.50($899m). Upcoming Close Strikes : 156.50($1.2b Dec 15) - BBG.
- The USD/JPY Average True Range(ATR) for the last 10 Trading days: 96 Points
Fig 1 : USD/JPY Spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
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AUSSIE BONDS: Richer But AU-US 10Y Diff At Range Top Ahead Of Jobs Data
ACGBs (YM +1.5 & XM +2.0) are modestly stronger despite today’s much stronger-than-expected home loan data.
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- Cash ACGBs are 1-2bps richer with the AU-US 10-year yield differential at +29bps. At this level, investors may be tempted to position for a narrowing in the differential, as it sits near the top of its well-defined ±30bps trading range (see chart).
- However, such trades carry meaningful risk ahead of tomorrow’s October employment data. The unemployment rate rose 0.2pp to 4.5% in September.
- The unemployment rate is widely expected to normalise somewhat at 4.4% but there are a few economists who expect it to stay at 4.5% or fall back to 4.3%.
- Last month's weak employment data triggered a solid ACGB rally, but those gains were more than fully reversed after the much hotter-than-expected Q3 CPI report.
- RBA-dated OIS pricing is showing a 25bp rate cut in December at a 9% probability, with a cumulative 16bps of easing priced by mid-2026.
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BONDS: Closed Slightly Richer But Underperforms $-Bloc
NZGBs closed 1bp richer across benchmarks.
- On a relative basis, NZGBs have underperformed the $-bloc, with the NZ-US and NZ-AU 10-year yield differentials both 3bps wider at +2bps and -27bps, respectively.
- Nevertheless, the NZ-AU 10-year yield differential remains close to its lowest level since 2020. At this level, investors could be lured into taking differential reversal trades. That said, such trades carry meaningful risk ahead of tomorrow’s October employment data. (see chart)
- Swap rates closed flat to 2bps lower, with the 2s10s curve flatter.
- RBNZ dated OIS pricing closed little changed across meetings. 28bps of easing is priced for November, with a cumulative 38bps by February 2026.
- The local calendar will see Card Spending data tomorrow.
- Tomorrow, the NZ Treasury plans to sell NZ$250mn of the 4.50% May-30 bond, NZ$150mn of the 4.25% May-34 bond and NZ$50mn of the 5.00% May-54 bond.
- The NZ Treasury has today announced the appointment of the following joint lead managers to form the panel for the syndicated tap of the 15 May 2036 nominal bond: ANZ Bank; J.P. Morgan; UBS; and Westpac.
- As previously announced, the Treasury expects to launch this transaction before calendar year-end 2025, subject to market conditions. As per usual practice, if the syndication occurs, the scheduled bond tender for that week will be cancelled.
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MNI EXCLUSIVE: Local Analysts On China's 2026 CPI Trends
Local analysts provide insight into China's 2026 CPI trends. On MNI Policy MainWire now, for more details please contact sales@marketnews.com.
