JPY soft and underperforming G10 – Scotiabank

The Japanese Yen (JPY) is down a marginal 0.1% against the US Dollar (ISD) and underperforming all of the G10 currencies in an environment broad-based USD weakness.

Markets signal disappointment in BoJ Gov. Ueda’s speech

"The JPY is retracing its early Asian session losses that had followed BoJ Gov. Ueda’s speech, in which the governor was disappointingly vague on the timing of future hikes. Recent messaging from the central bank had been somewhat more emphatic in its tightening bias, leading market participants to shift their expectations for a 25bpt hike at the next meeting on October 30."

"We remain medium-term JPY bulls (USD/JPY bears) and see scope for meaningful gains as sentiment and positioning remain relatively light. We also note USDJPY’s break from its fundamental drivers (yield spreads) that imply much lower levels."

"The options market’s premium for protection against JPY strength (USD/JPY weakness) is currently quiet small, leaving considerable room for further upside. For USD/JPY, we look to near-term resistance around the 50 day MA (147.8) and look to medium-term weakness toward 142.00."