USD/JPY and the JPY crosses consolidated in the European session. JPY made up ground early on in the European session amid rumours of a BOJ hike in December. The rumours emanated from the Japanese money market amid traders citing BOJ contact over year-end funding. Sovereign name offers in USD/JPY and EUR/JPY also fueled talk of Russian interest, forcing speculative accounts to hit the bid in USD/JPY and EUR/JPY.
USD/JPY bids were filled from 118.80 down to 118.50, with stops tripped below the latter to record a 118.45 low. Importers and proprietary names bought in size from the lows and the pair recovered into the 118.65 area. EUR/JPY traded down to 149.75 and turned higher with USD/JPY to recapture levels above 149.00. Offers from 149.20/30 capped the cross, while USD/JPY traded indecisively.
Short-term accounts pointed towards a developing bear trend on the daily chart, while medium-term players remain bullish while spot holds onto levels above the 118.35 long-term trend line. Both pairs are corrective despite the tentative recovery made from yesterday's lows. We do not expect a return to the recent highs in the near-term.
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