USD/JPY and other JPY pairs did little on the first day of the Japanese fiscal year with orders bracketing the market. A weaker BoJ Tankan report was largely discounted and this led to limited upside. The European session saw speculative accounts and interbank names favour a weaker JPY, with a weaker Tankan and last week's benign CPI encouraging JPY selling.
USD/JPY moved up to 117.85 from the 117.55 area, yet struggled to overcome profit take orders ahead of 118.00 and an overhang of gamma related activity amid expiries at 118.00/05 today. EUR/JPY was mid range after trading off the 157.65 area overnight. Tentative interest for the JPY crossed underpinned the pair ahead of 157.00 and this left the pair mid range ahead of the US session.
Some attention was on US-China trade relations after Friday's announcement from the US that it would impose tariffs on Chinese paper exports. China retorted over the weekend that this was unacceptable. The market shrugged off fears of further protectionist US policy, with weaker Japanese fundamentals offsetting fears of a developing bearish US picture. Note, US ISM is due at 14:00GMT.
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