Intraday Market Thoughts

USD/JPY Bounces Again, Japan Trade on Tap

by Kyle Morrison
Feb 7, 2013 23:24

Dip buyers rescued the yen crosses from declines in US trading once again. The pound was the best performer on the day while the euro lagged. The highlight of the Asia-Pacific session will be Chinese CPI. A new set of Premium Insights will be released at the start of the US Friday session. 

Draghi put on his dovish hat on Thursday and cut the euro down by as much as two cents as Ashraf mentioned earlier.

Broader markets were in a risk averse move. That partly came due to a comment from the Fed's Evans who said there was a possibility QE could be halted before unemployment fell to 7%. Evans is one of the most dovish members of the FOMC and his comment caused a sharp drop in gold (that later recovered).

It was interesting that USD/JPY wasn't able to rally on Evans comment but it came at the same time as Draghi's press conference and that caused cross-currents in markets. As stock markets sold off, USD/JPY fell to 93.10 and the yen crosses declined deeply.

However the dip buyers emerged once again after European markets closed and USD/JPY bounced to 93.70. Patient traders continue to hope for a retracement to 90.00 but that is unlikely unless some harsh fundamental news crushes risk appetite.

The main indicator on the calendar is Chinese CPI at 0530 GMT. The CPI is expected up 2.0% year-over-year, much slower than the 2.5% rise in December but officials have shifted to a more hawkish bias and warn that inflation is likely to accelerate in the months ahead.

Japanese current account data is also on the calendar at 2350 GMT but it rarely riles markets.

Act Exp Prev GMT
Consumer Prce Index (JAN) (m/m)
1.0% 0.8% Feb 08 5:30
Consumer Prce Index (JAN) (y/y)
2.0% 2.5% Feb 08 5:30
Current Account n.s.a. (DEC)
¥-144.2B ¥-222.4B Feb 07 23:50

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