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May 14 - 11:55 AM

USD/JPY's Knee-Jerk PPI Response High Faded, With CPI, Retail Sales Next

By Randolph Donney  —  May 14 - 09:50 AM
  • USD/JPY briefly spiked up to 156.80 after seemingly hawkish PPI headlines

  • But deep downward revisions then noticed and Tsy ylds and dollar backed down

  • In fact, 2- & 10yr Tsy-JGB ylds spreads are lowest since April 5 & March 28

  • Pullback finding a foothold on hourly kijun at 156.24 by Mon's 156.26 high

  • Kijun and Mon's low are next supports at 155.91/50

  • Pricing of likely Sep & Dec Fed cuts only modestly changed at 21 and 44bps

  • Probabilities of BoJ rate hikes in July and Oct, beyond trend slowly higher

  • Japan's wholesale inflation adding to BoJ tightening prospects

  • But still wide spread between US and Japan rates and yields

  • Keeps carry traders in dip-buying and bullish mode for now

  • Focus now on Wed's U.S. CPI and retail sales, with Powell later today

  • If the data are hawkish, 61.8% of 160.245-151.86 at 157.04 is next target

  • Followed by May 1's 157.99 pre-2nd suspected intervention daily high

  • Intervention threat seen most acute if 160.245 & 1990's 160.35 highs at risk

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Refinitiv IFR Research/Market Commentary


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