JPY continued to trade on the heavy side as JPY remained the funding currency of choice for carry trades. Japanese investor demand for higher-yielding overseas assets continued. These factors along with expectations of a hawkish Fed tonight and no interest rate hike by the BOJ next underpin both USD/JPY and the JPY crosses.
A Fuji Evening newspaper report that the BoJ could still hike interest rates in December or January failed to stir the market, especially as it tipped a BoJ Fukui resignation thereafter to take the political heat for the move. USD/JPY consolidated yesterday's gains. Offers from 117.00 capped amid reports of exporters lowering their interest after yesterday's decent 117.20-30 offers from sovereign names. Stops are seen building above 117.30. Most of the JPY crosses remained buoyant.
EUR/JPY traded up to a fresh record high of 155.05 in Asia but struggled to recapture these levels amid profit take orders. Retail investor flows supported any pullback in the 154.60 region, leaving the pair in a narrow range. GBP/JPY, AUD/JPY and NZD/JPY also remained bid after seeing fresh highs.
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