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Sep 07 - 11:55 AM

USD/JPY - COMMENT-USD/JPY Gets BOJ QE Lift As 145 Hurdles Delay Test Of 1998 Peak

By Randolph Donney  —  Sep 07 - 10:30 AM

USD/JPY should eventually clear 145 resistance and reach its 1998 high of 147.64, as the BOJ's JGB purchases -- quantitative easing -- needed to defend its 25bp cap on 10-year JGB yields, weakens the yen and any chance of successful Japanese FX intervention nL4N30E237.

USD/JPY is overbought and already up more than 3% since Monday after hitting another 24-year high at 144.99.
The 145 level and the 100% Fibo off August's 130.40-137.70 base at 145.01 is being defended.
The 161.8% Fibo is at 149.52, as a breakout target near other technical targets straddling 150.

Support is seen at 144 and 143.

Markets are awaiting Fed speakers and the beige book after weak Chinese data and a retreat in energy prices nL4N30E11P weighed on Treasury and European yields.

Wednesday's 142.75-144.99 rally ignored a dip in 2-year Treasury-JGB yield spreads below August's 3.52% high.
Recent U.S. jobs and ISM data reinforced the Fed's hawkish guidance nL1N30219A, with a third consecutive 75bp rate hike on Sep.
21 mostly priced in.

In contrast, the BOJ's -0.1% policy rate and QE defense of its 10-year yield cap this month nL1N30E0BQ has accelerated the yen's broad fall.

For more click on FXBUZ

Refinitiv IFR Research/Market Commentary


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