Yen bulls should be ready for disappointments
Yen appreciation linked to Bank of Japan tightening has slowed to crawl as Japanese data disappoints and as political uncertainty rattles local markets, while options signal a lack of direction as the upcoming non-farm payrolls report approaches.
CitiFX’s economic surprise index for Japan has slumped the past two weeks after improving for nearly two months. August figures released Monday show retail sales are holding firm though industrial production and housing starts sagged.
The Bank of Japan’s Q3 Tankan report is due Tuesday and, later this week, markets will eye consumer confidence and composite PMI for September. Further signs that growth in Japan is slowing would further delay BOJ rate hike expectations, keeping yen bulls sidelined.
Option convexity suggests spot will be choppy within a range into U.S. payrolls Friday. Golden Week celebrations will thin liquidity and an unraveling of quarter-end dollar premiums may weigh on spot.
There is downside option interest around Japan elections and a BOJ meeting at the end of October. Though, with the markets already long yen and policy accommodation likely to stay in place until then, fading spot moves lower seems reasonable.
USD/JPY needs to slip beneath 140.62 Sept. 16 close to entice bears while a close the 145.22 Sept. 26 high would encourage bulls.
For more click on FXBUZ
Yen chart https://tmsnrt.rs/3Y0jM2B
(Robert Fullem is a Reuters market analyst. The views expressed are his own.)
</body></html>Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
