The USD/JPY traded to a low of 118.80 in the morning sell-off but has now stabilized. Stops are eyed under 118.70/75 but some now see USD/JPY consolidating after the move lower today, with the retreat in USD/JPY still eyed as part of the recent range.
Also seen adding to JPY gains today was higher-than-expected corporate goods prices released last night at 2.0% for the year against expectations of a 1.9%. Of note too is the speculation from Japanese fund managers, heard in the JGB market overnight, that they fear that Japan will again be pressured to raise rates again at the G-7, in order to normalize its monetary policy.
Though Japanese officials have denied that any rate move was due to outside pressure and BOJ officials have denied the rate rise was due to pressure from the government, the Japanese fund managers still suspect more pressure to raise rates for the May 16-17 BOJ meeting in order to quash the continued speculative flow of funds into carry trades. USD/JPY is currently at 118.98/02.
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