In true central banker form there was something for both hawks and doves in the post BOJ report press conference. Governor Toshihiko Fukui kept the rate-outlook fairly open with reference to the possibility of a rate hike by year-end but at the same time the view that Japanese interest rates would remain very low and that there was no predetermined time for a rate increase.
The bond market has latched onto the year-end reference and JGB futures dipped and USD/JPY climbed to 117.82, putting on 50-points from early London lows. The intraday chart showed promise and the possibility of a 118.00 test, which did materialize into the Europe midday. With the daily picture suggesting a reversal the buy side is favoured for the Tuesday session.
Price had broken below a long-term trend support line last session and closed just below but the break has not been maintained and a close above the 117.55 line today could set up a run back to 118.50 before the week is out. EUR/JPY has bounced strongly from 149.20 as commercial bidding underpins the rally to 149.80.
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