JPY continued to trade on the heavy side, albeit in the familiar trade ranges. USD/JPY was locked in a 118.28-73 range with few major flows noted. The market looks to be in a reactive mode, awaiting data out of the US and Japanese data Friday. In the case of Japan, Friday will be a big day with CPI data and the latest BoJ forecasts on the economy due for release.
There was talk the central bank could shift its focus away from inflation and onto GDP growth, which would further increase speculation of a near-term move in rates. Even with this talk, JPY favoured easier levels. Large investment trust launches overnight disappointed in the main, although Nomura did see a good take up in one of its funds. More fresh launches are noted tomorrow and Friday and these look to be supportive along with month-end importer settlements at the Tokyo fix tomorrow.
Supports are seen at 118.40/50, 118.20/30 and 118.00/10. EUR/JPY pushed up towards 162.00 despite expectations of further sales from Japanese investors looking to repatriate some funds on today's large French OAT redemptions and coupon payments (E30 bln+).
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