JPY strength and Nikkei weakness look to be feeding on each other with FX players eyeing the plunge on the TSE and buying back or afresh more JPY against an assortment of currencies. Recent stock market declines, for their part, have been on the back of JPY strength with Japanese exporter shares leading the way down. USD/JPY sold off from the get go, trading down from 116.78 to as low as 115.15 before steadying.
Since, it has whipped around between 115.15-115.60. Offers up top look to be building and many players eye more downside, perhaps to 114.43, the spike low on December 5 or even the 114.00 level, 61.8% retracement of the move up from 109 to 122.20. EUR/JPY traded down from 154.10 initially to 151.99 in Asia and then 151.15 in London.
It has since bounced back to 151.35 but the bias here too remains down with many players closely eyeing how the US stock market trades All other JPY crosses have seen similar sell-offs, especially heated in NZD/JPY and GBP/JPY. NZD/JPY plunged from 80.36 to levels around 78.00. GBP/JPY fell from just under 227 to 221.50. Carry trade paring set to continue.
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