JPY: Yen Crosses Up Off Lows, Following Equity Sentiment, BoJ Speech Today
Yen crosses were a focus point as Monday trade unfolded. From lows near 190.00, GBP/JPY recovered and sits back near 192 in early Tuesday dealings. This was still a 0.30% drop and the 5th straight fall for the pair. EUR/JPY fell by a similar amount but rebounded off 160.00 (last near 161.10). For USD/JPY, we were supported under 157.00 and track near 157.60 in early Tuesday dealings, after seeing little net change for Monday's session.
- As EU stocks recovered from session lows, yen crosses found some support. EU indices still finished down for Monday's session (-0.46%), while US markets were mixed, SPX firmer (+0.16%), but the Nasdaq weaker (-0.38%).
- Key yen crosses still sit below important support points. For GBP/JPY the 20-day EMA is back above 195.00, for EUR/JPY this level is back near 162.55.
- For USD/JPY, not much has changed from a technical standpoint, although upward momentum has waned to some degree. Focus will rest on downside support at the 20-day EMA at 156.71.
- US yields ticked higher on Monday, with US-JP yield differentials resuming uptrends in the aftermath of Friday's NFP beat, but this hasn't been a key driver of USD/JPY sentiment in recent sessions.
- Locally today, onshore markets return, with focus on a speech from BoJ Deputy Governor Himino in Kanagawa, which kicks off at 10:30am local time.
- On the data front, we have Nov BoP figures, along with bank lending for Dec out early. later on the Dec Eco watchers survey is out.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
MACRO ANALYSIS: MNI US Macro Weekly: Inflation Data Keep Fed Cut On Track
We have published and e-mailed to subscribers the MNI US Macro Weekly offering succinct MNI analysis across the range of macro developments over the past week. Please find the full report here:
USDCAD TECHS: Fresh Cycle High
- RES 4: 1.4393 2.0% 10-dma envelope
- RES 3: 1.4327 2.382 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 2: 1.4296 2.236 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 1: 1.4246 2.00 proj of the Oct 17 - Nov 1 - 6 price swing
- PRICE: 1.4236 @ 16:38 GMT Dec 13
- SUP 1: 1.4069/3944 20- and 50-day EMA values
- SUP 2: 1.3928 Low Nov 25 and a key support
- SUP 3: 1.3822 Low Nov 6
- SUP 4: 1.3747 Low Oct 17
The trend direction in USDCAD remains up and this week’s gains to a fresh cycle high, reinforces the current bullish theme. The pair has cleared 1.4178, the Nov 26 high, to confirm resumption of the uptrend and maintain the price sequence of higher highs and higher lows. Sights are on 1.4246 next, a Fibonacci projection. Key short-term support has been defined at 1.3928, the Nov 25 low. Initial support to watch lies at 1.4069, the 20-day EMA.
US TSYS: Extending Late Session Lows, Curves Bear Steepen Ahead Next Wed's FOMC
- Treasuries traded steadily lower throughout Friday's session, initially mirroring weak action in Bunds and Gilts. By the close, the Mar'25 10Y contract slipped to 109-26 (-18) the lowest level since November 22, 10Y yield rising to 4.4046% high (+.0768).
- Initial technical support at 109-22 (76.4% Nov 15 - Dec 6 Upleg) followed by 109-20 (Low Nov 20/21).
- Curves bear steepened: 2s10s +2.272 at 15.568 as short end rates outperformed ahead of next week's FOMC policy announcement where another 25bp rate cut was expected but not certain amid current macro and political uncertainty. That said, the latest unemployment and inflation data have kept the FOMC on track to cut the federal funds rate by 25bp (to 4.25-4.50%) next Wednesday.
- Projected rate cuts into early 2025 look near steady to lower vs. this morning levels (*) as follows: Dec'24 cumulative -24.3bp (-23.7bp), Jan'25 -28.6bp (-29.6bp), Mar'25 -42.2bp (-43.9bp), May'25 -48.4bp (-50.5bp).
- No reaction to this morning's import/export prices, Monday brings flash S&P Global PMIs, Retail Sales, IP & Cap-U on Tuesday.
