JPY remained on the softer side, yet weakness was clipped by profit taking via USD/JPY and the JPY crosses. A combination of Japanese exporter sales and profit-taking by speculative accounts was noted. Any pullback from the highs in EUR/JPY and USD/JPY was short lived, with decent support noted amid light Japanese investor demand and general leverage fund interest.
EUR/JPY traded up to a fresh record high of 160.19 and met some light sovereign name selling and option protective interest amid a 160.20 option trigger and plain vanilla strikes. GBP/JPY traded on a supportive footing, holding onto the gains made in late Asia amid the FT report of possible HIA flows back to the UK down the road. The general flight to yield underpinned both AUD/JPY and NZD/JPY despite some profit taking and bond related selling.
There were reports of currency related profit taking in Australian and European bonds. JPY losses may well be tempered going forward, with the weekend G7 meeting expected to increase risk aversion despite the lofty levels in the JPY crosses. Profit taking and risk reduction amid fears of JPY reprisals may lead price action.
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