JPY short-covering interest looks to have abated with USD/JPY holding just above 120.00 in Asia today and EUR/JPY and GBP/JPY showing some bounce. Those who had shorted all three pairs look to be covering up ahead of the upcoming G7. Like Japanese players, overseas players seem to be coming around to the view that even if the weak JPY is discussed at the G7, it would not be singled out in any consequent communique.
US Treasury and MoF officials note that it would only be natural that JPY come up in conversation. US TsySec Paulson also reiterated overnight that current JPY levels reflected fundamentals. From talk in New York of more stops below 120.00, the talk in Tokyo centers more on the amount of bids below this level. To wit, Japanese importers were good buyers early in Asia and look to have sizeable bids trailingdown.
Recent shorts are also seen with bids below. Offers remain from the 120.50-60 level from medium and longer-term players still looking to pare down short JPY positions however. EUR/JPY despite its newfound spunk sees offers fromthe 156.15-20 level. GBP/JPY looks to be capped for now at 237.
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