JPY trades on an easier footing amid fresh fund flows. In general, JPY underperformed the broader market despite the focus on dollar moves in the wake of the yesterday's FOMC statement. Leverage activity and hedge fund interest joined the importer bids. The pair made gradual upside progress and was buoyed by healthy interest via the JPY crosses.
AUD/JPY and GBP/JPY were helped by new Uridashi issues next week, while EUR/JPY saw good retail investor demand of its own. Next week coincides with the Japanese fiscal year end and the market will be buffeted by these flows. This appeared to clip gains, with EUR/JPY struggling into 157.50 and USD/JPY unable to clear 118.00. Focus is likely to turn back to yield, with equity market stabilisation increasing risk appetite and a limited near-term data schedule.
BOJ Governor Fukui's assurance of low interest rates in the near-term also injected fresh liquidity and increased the chances of a USD/JPY move up to 118.30-50. EUR/JPY has scope for further gains, although it is notable that some of the other JPY crosses are seeing larger flows as EUR/JPY struggles to recapture the momentum seen last month.
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