USD/JPY and the JPY crosses recovered in Asia today from the lows, however, movement was skewed the downside in the European morning. Any gains were sold into as speculative players and macro accounts looked to pare back exposure. USD/JPY traded up to 119.57 on importer demand and buying from fund names. A quasi-official account and a US fund was also noted but the pair was stopped by good 119.60 offers, leaving movement close to the 119.35/40 area.
EUR/JPY pushed up to 157.00 but was unable to overcome good size offers, leaving stops at 157.05/10 intact. Bids at 156.60 from Japanese funds gave way and the pair traded into 156.50, with focus on the 156.05 trend line. Price action to remain choppy are to be expected, with the attention on next week's BOJ policy meeting. Fresh investment trust launches may alleviate some downside pressure amid a return of good Japanese interest on dips.
However, the risk of BOJ move in rates increases risk reduction and position squaring. Some economists point towards weak spots on the Japanese economy but many now feel Japanese officials have enough reasons to adjust their policy without damaging the growth outlook.
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