It’s a risk-on day and these days that tends to translate to a softer USD/JPY as bonds are also bid alongside equities in trading today. Not to mention that the dollar has been more favoured as a safety currency this year, so any risk-positive momentum is likely to lead to a fall in USD/JPY such is the one today.
The pair is down 0.8% to 147.47 and closing in on its 100-hour moving average (red line) next at 147.24. A drop below that will see sellers regain near-term control with a keen emphasis to try and take a run at 145.00 to gather further momentum.
For now, Japan officials can take comfort in the recent price action – in the sense that we are not seeing buyers overstep to take a run at the 150.00 level again since two weeks ago.
But more importantly I would say, is that one should be paying attention to some subtle shifts in communique from Japan as of late. The BOJ did it on Friday here and we also got remarks from finance minister Suzuki earlier today here. I would say it is premature to say that this is the turning point in the BOJ pivot argument but I am open to the idea that perhaps domestic authorities are starting to accept that this is the only option to really arrest any further yen decline.
Besides, with the rest of the world having to deal with rampaging inflation , is it too far-fetched to believe that some of that will eventually seep into the Japanese economy?