JPY crosses were the main influence on the European market, with continued investment flows helping to underpin USD/JPY and the other dollar majors. Investment trust launches encouraged heavy flows. EUR/JPY traded on a supportive footing despite moving off the 155.50 record high.
The pullback was limited to 155.25, yet ongoing bid interest underpinned. Standing offers from exporters and reports of sovereign name activity kept the topside in check. USD/JPY climbed back above 117.00 at the start of the European session, yet struggled ahead of 117.20, where sovereign names are reportedly sitting. Middle Eastern selling interest was also tipped but this failed to dent the pair, which held ahead of 117.00 for a large part of the session. Large option strikes at 117.00 over the next couple of sessions are expected to limit action here.
The JPY crosses should continue to shape near-term direction, with GBP/JPY, CHF/JPY, AUD/JPY and EUR/JPY all benefiting. Friday's Tankan report may reduce the pace of JPY weakness but this trend is well developed while Japanese rates remain off the table. EUR/JPY stops eyed at 155.50 and 117.30 USD/JPY interest is noted.
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