A busy overnight session for the Yen market with data and rhetoric influencing price action to a great extent. Much weaker than expected Japanese machinery orders (down 7.4% in Sept vs an expected 1.9% rise) provided a Yen negative factor along with further BOJ talk of a slow adjustment to interest rates.
USD/JPY bounced out of the 117.30's and reached 117.68 before the underlying theme of a generally weaker Dollar took hold once more. BOJ talk helped boost the Yen with governor, Fukui, expressing concern over the carry trade position. These remarks plus the latest reserve story out of China provided scope for further Yen gains.
Nothing new in the Zhou reserve diversification comment but the market is in Dollar negative mode and was already edging USD/JPY lower following a weak US Michigan survey Thursday. USD/JPY has fallen back to 117.19 from 117.68 and bounced back to 117.40. Talk of Kampo bidding 117.20 spooked the market into short covering.
Talk of good sized offers in the 117.70-80 area and stops under 117.00 and Japanese importer bids just ahead. Option barriers remain at 116.50. 117.00 Now Key.
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