JPY remained offered throughout the European morning. Bid interest was noted in USD/JPY, EUR/JPY and other JPY crosses. USD/JPY interest was healthy into the 116.00 region amid interest from institutional investors and talk of quasi-official name demand. In general, the dollar traded on a softer footing, which restricted USD/JPY"s ability to press higher.
The pair stalled ahead of yesterday's 116.39 high but retained a supportive tone amid aggressive cross-JPY interest. EUR/JPY traded from 152.30 up to the 153.00 area amid large demand from a US investment house and other leverage names. Selling was noted from European funds and option accounts but the weight of the demand overwhelmed. The US name reportedly bought EUR 1.5 billion and further momentum fund demand was seen. Dovish talk from BOJ Governor Fukui and MOF's Watanabe encouraged JPY selling vs high yielders, such as NZD, AUD and CHF.
Near-term momentum should take its lead from the Bernanke speech after the European close and could impact USD/JPY. While, the JPY crosses are looking overstretched, particularly after the EUR/JPY and GBP/JPY march higher.
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