USD/JPY trades on a supportive footing, just off the 117.17 high recorded early on in the North American session. Japanese rate hike expectations have disappeared from the market following Friday's new stories from JiJi press and Yomiuri. Japanese rate have come in a little but the cash market is still pricing in the risk of a December move.
The speculative market is encouraged by the press stories, with previous rate changes tending to be leaked on JiJi or Yomiuri. As a consequence, macro- based accounts and leverage funds have been actively selling JPY. All the JPY crosses have benefited, while USD/JPY had an added boost from Friday's strong US NFP data, which boosted US yields. The low yield environment in Japan should fuel further overseas investment by retail investors and pension funds.
Indeed, Sunday's Nikkei story that government pension funds may add more foreign assets is just another negative JPY story adding to an already well developed theme. EUR/JPY trades at 154.50, USD/JPY sits at 117.10 and AUD/JPY is around 91.70.
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