JPY marked time in the European morning. Traders had one eye on the ECB rate announcement and the other on tomorrow's US NFP data. The market has tested both sides of the recent range since the Asian open. USD/JPY trended lower initially after failing to trade beyond 115.40 in Asia.
A custodial name bought from 114.80 and this encouraged European name interest. Movement was extremely limited, with the pair capped ahead of 115.00, where a decent size option strike is noted. EUR/JPY traded on firmer footing amid regional interest to sell JPY. GBP/JPY, AUD/JPY and NZD/JPY also saw good interest. EUR/JPY lost its way above 153.00 amid real money name offers. Sovereign name interest via EUR/USD eventually saw the pair topple over and trade back into the 152.50 area, where another batch of buying was noted.
Near-term direction is tricky to call, with ECB already expected to hike by 25bps. The focus will be on how hawkish the accompanying statement is and whether this will encourage further yield plays via EUR/JPY. We have already come along way despite trading a little way from the highs.
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