Large speculative flows continue to feed volatility into the Yen markets, which led to a choppy overnight session for USD/JPY. The official line remains one of denial and apathy towards the current tremors that have unsettled the financial markets. BOJ Governor, Fukui, suggested overnight that financial markets were merely adjusting and that risk reduction would not harm the real economy.
The central banker also reiterated his view that the BOJ rate hike was not responsible for the equity market moves. USD/JPY broke higher late in the Wednesday session, leading to a New York-Asia hand over at levels around 117.00. A push to 117.58 provided Japanese exporters with a good selling opportunity and the market then settled into a choppy 117.05 to 117.25 range heading into Europe.
Looking ahead, something tells that the USD will struggle to make headway while Japanese corporate interest is expected to top and tail USD/JPY. Option plays are reportedly mixed in with the importer interest on the buy side while the overnight rally reportedly cleared away a large swathe of option offers and stops. On balance a Yen buy while USD/JPY is below 117.60.
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