JPY: Yen Underperforms USD Pullback, BoJ Nominations In Focus Today
Yen was the weakest performer through Monday's session within the G10 space. Indeed, yen was the only major currency to slide against the USD for the session, losing 0.80%. USD/JPY touched a high of 132.91 in NY trade, before some selling interest emerged. We are now back around the 132.40/45 level.
- Yen was weighed on a relative value basis by the rebound in equity sentiment, with higher beta plays like NZD, AUD and SEK noticeable outperformers on a cross basis. NZD/JPY surged back towards 84.50.
- The yen didn't get much relief from a slightly lower US backdrop, although it has been playing some catch up on this front in recent sessions, so this may have limited the impact of the pullback for the yen. The US-JP 10yr swap spread edged down to +253bps from +256bps at the end of last week.
- Locally, Kazuo Ueda is expected to be presented to parliament at 11am local time (02:00 London) as the new BoJ Governor. The market will be looking for hints around BoJ policy direction, although Ueda stated that easing is still appropriate. These comments helped unwind the yen bounce post the media reports he would be announced as the new Governor.
- On the data front, Q4 GDP prints. The market expects +0.5% q/q, versus -0.2% prior. Final Dec IP figures print later.
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AUSSIE 10-YEAR TECHS: (H3) Extends Spell of Strength
- RES 3: 97.185 - High Apr 5
- RES 2: 97.040 - High Aug 03
- RES 1: 96.714 - High Dec 9
- PRICE: 96.420 @ 15:47 GMT Jan 13
- SUP 1: 95.675 - Low Oct 24
- SUP 2: 95.670 - Low Jun 17 and a key support
- SUP 3: 95.360 - 1.00 proj of the Aug - Oct - Dec price swing
Aussie 10y futures extended their bounce off cycle lows with a solid bounce last Friday. The rally puts prices around 40 ticks above the late December lows, but still short of the next material resistance at 96.714. For now, the bear leg remains in play and the recent continuation lower into end-2022 suggests scope for weakness near-term. An extension would expose the key support at 95.675, the Oct 24 low and 95.670, the Jun 17 low, on the continuation chart.
USDCAD TECHS: Downtrend Remains Intact
- RES 4: 1.3751 High Nov 4
- RES 3: 1.3705 Dec 16 and the bull trigger
- RES 2: 1.3665 High Jan 6
- RES 1: 1.3515 50-day EMA
- PRICE: 1.3416 @ 16:18 GMT Jan 13
- SUP 1: 1.3322 Low Jan 13
- SUP 2: 1.3317 Low Nov 24 / 25
- SUP 3: 1.3226 Low Nov 15 and bear trigger
- SUP 4: 1.3205 61.8% retracement of the Aug 11 - Oct 13 rally
The short-term outlook in USDCAD remains bearish. The pair has breached a key support at the 1.3385 level - the Dec 5 low. The break strengthens bearish conditions and opens 1.3317, the Nov 24 / 25 low. The bear trigger lies at 1.3226, the Nov 15 low. On the upside, key resistance is far-off at 1.3705, the Dec 16 high. Initial firm resistance is seen at 1.3515, the 50-day EMA.
AUDUSD TECHS: Trend Needle Points North
- RES 4: 0.7137 High Aug 11
- RES 3: 0.7059 2.236 proj of the Oct 13 - 27 - Nov 3 price swing
- RES 2: 0.7009 High Aug 26
- RES 1: 0.6994 High Jan 13
- PRICE: 0.6944 @ 16:16 GMT Jan 13
- SUP 1: 0.6860 Low Jan 9
- SUP 2: 0.6813 20-day EMA
- SUP 3: 0.6688 Low Jan 3 and key support
- SUP 4: 0.6650 Low Dec 22
AUDUSD extended higher Thursday, amid global dollar weakness. This retains a bullish theme. The pair has cleared 0.6893, the Dec 13 high and this confirmed a resumption of the uptrend that started Oct 13. The move higher maintains the bullish price sequence of higher highs and higher lows and note that moving average studies are in a bull mode position. The focus is on 0.7009 next, the Aug 26 high. Key support lies at 0.6688, Jan 3 low.
