Dovish remarks from BOJ Governor Fukui were the catalyst for broader JPY losses against the high yielders. He cited weaker consumption and CPI and would not be drawn on the timing of the next hike, adding that they would need to take a close look in January.
EUR/JPY surged, rallying from 154.40 up to 155.50. Stops at 154.80 and 155.00 were taken out in the wake of speculative account and momentum fund demand. The pair remained bid throughout despite struggling to recapture the previous 155.60 all time high. GBP/JPY also saw good carry trade interest according to sources and AUD/JPY moved modestly higher. USD/JPY made an initial push higher, clearing offers at 118.20 on the way up to 118.31. The pair was undermined by a heavier dollar, which gathered pace after a stronger than expected German Ifo reading.
EUR/USD pushed higher and USD/JPY slipped back into 118.00, where option strikes reduced price action for the remainder of the European morning session. The attention is now turning towards US housing releases and PPI due at 1:30GMT, although JPY funded trading should continue to influence the broader market.
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