JPY: Yen Outperforms Broader USD Gains, USD/JPY Near Term Bear Threat Remains
USD/JPY struggled for meaningful upside through Wednesday trade. Moves above 155.50 drew selling interest, while dips to just under 155.00 drew buying interest. We track near 155.30 in early Thursday dealings, after a yen gain of around 0.15% for Wednesday's session. Yen outperformed the rest of the G10, with most currencies down, led by the A$.
- The DXY and BBDXY USD indices are a touch higher for Wednesday trade, with a brief spike higher as the FOMC unfolded. The FOMC decided to remove the reference to inflation making progress towards the goal, despite it remaining somewhat elevated. However, Chair Powell explained that this was merely “cleaning up the language” and was not intended to send a signal.
- US yields sit slightly higher at the front end of the curve, but little changed at the back end. US-JP yield differentials are holding close to recent lows.
- A softer US equity tone (SPX off 0.47%, Nasdaq down 0.51%), with a flurry of earnings from the tech space late in US trade, may have also helped the yen at the margins. AUD/JPY is sub all key EMs, and back around the 96.70/75 handle. The 96.00 region has marked lows so far in 2025.
- For USD/JPY technicals, a near term bear threat persists following Monday's sharp pull back (low of 153.72). A resumption of weakness would open 152.55, a Fibonacci retracement point. Initial firm resistance is at 156.75, the Jan 23 high.
- Note in the option expiry space today, the following for NY cut later today: Y154.00($627mln), Y154.75($700mln), Y155.00($1.4bln), Y156.00($544mln).
- On the local data calendar today we just have weekly offshore investment flows.
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USDCAD TECHS: Bullish Flag Formation
- RES 4: 1.4578 2.0% 10-dma envelope
- RES 3: 1.4539 3.382 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 2: 1.4508 3.236 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 1: 1.4467 High Dec 19
- PRICE: 1.4388 @ 16:13 GMT Dec 30
- SUP 1: 1.4336 Low Dec 20
- SUP 2: 1.4269/4093 20- and 50-day EMA values
- SUP 3: 1.4011 Low Dec 5
- SUP 4: 1.3928 Low Nov 25 and a key support
USDCAD bulls remain in the driver’s seat and the pair is holding on to the bulk of its recent gains. The latest pause appears to be a flag formation - a bullish continuation signal. Note too that moving average studies are in a bull-mode position, highlighting a dominant uptrend. Sights are on 1.4508 next, a Fibonacci projection level. Initial firm support to watch lies at 1.4269, the 20-day EMA. A pullback would be considered corrective.
US: CME Early Close for January 9 Day of Mourning to Honor Pres Carter Passing
- While the NYSE Group markets will close in observance of the National Day of Mourning for President Carter (New York Stock Exchange, NYSE American Equities, NYSE American Options, NYSE Arca Equities, NYSE Arca Options, NYSE Chicago and NYSE National), the CME Group has opted for early close, link HERE
- FI open outcry will close at 1300ET, GLOBEX shortly after at 1315ET.
- More to follow, but economic data expected that day is likely to proceed as normal (weekly jobless claims at 0930ET, Wholesale trade & inventories at 1000ET).
- Treasury auctions scheduled for January 9 remain uncertain (4- & 8W bills at 1130ET, 30Y bond re-open at 1300ET).
AUDUSD TECHS: Southbound
- RES 4: 0.6471 High Dec 9
- RES 3: 0.6444 50-day EMA
- RES 2: 0.6384 High Dec 13
- RES 1: 0.6274/6323 Low Dec 20 / 20-day EMA
- PRICE: 0.6216 @ 16:12 GMT Dec 30
- SUP 1: 0.6199 Low Dec 19
- SUP 3: 0.6158 1.236 proj of the Sep 30 - Nov 6 - 7 price swing
- SUP 3: 0.6100 Round number support
- SUP 4: 0.6045 1.500 proj of the Sep 30 - Nov 6 - 7 price swing
AUDUSD bears remain in the driver’s seat and the pair is trading closer to latest lows. Recent weakness maintains the price sequence of lower lows and lower highs. Note that moving average studies are in a bear-mode position too, highlighting a dominant downtrend. Scope is seen for an extension towards 0.6158 next, a Fibonacci projection. Initial firm resistance to monitor is 0.6323, the 20-day EMA.
