Risk appetite returns, yen eases

USD/JPY and JPY crosses were contained for most of Asia before popping higher. USD/JPY was again in the lead and holding initially between 118.82-119.01. Large option expiries at 119.00 helped cap it. Tokyo importer and investment bank and offshore name bids were proved strong however, and pushed it higher after the BoJ upped its economic assessment. Another push up in the Nikkei and risk-on feel and higher US Treasury yields aided the effort. Shorts were forced to cover and 119.37 traded. Despite the leg up, more headwind is eyed with more large option expiries at 119.50 ($1.384 bln) and 120.00 ($6.695 bln). EUR/JPY popped in sympathy with USD/JPY, up from a 145.95-146.27 range to 146.49 despite the broad EUR bear bias. GBP/JPY legged up from 186.00 to 186.82, making more tracks away from the 181.70 spike low on the 16th. AUD/JPY bounced from 96.90 to 97.57, away from New York’s retracement low of 96.74 and towards yesterday’s 97.61 high. NZD/JPY rallied from 92.12 to 92.78, in an uptrend from Wednesday’s 90.26 low.

EUR/USD and the EUR complex did little in Asia again and especially so with Christmas/the New Year fast approaching and many already sidelined. The to-do regarding Russia and RUB also looks to have passed though crude oil trading remains volatile. Large vanilla option expirations on both sides virtually straight-jacketed EUR/USD. E3.785 bln 1.2250-60 and E10.695 bln 1.2300 strikes will expire at the New York cut tonight. The overall EUR bias remains down with the Fed now more hawkish than heretofore and the ECB expected to embark on QE next year. EUR/GBP reflected such expectations, trading down to 0.7837 yesterday. Asia saw it tread water just off this low between 0.7839-44. Stops are eyed sub-0.7825, 0.7828 the recent floor. EUR/CHF was in a holding pattern between 1.2038-47 after the volatility last night following the SNB’s surprise move to negative interest rates.

GBP/USD saw stuck between 1.5651-73 in Asia. Weaker GfK consumer confidence data had little effect.

USD/CHF was slightly better bid between 0.9795-09815 after the SNB’s surprise move into negative interest rates overnight.

AUD/USD opened in Asia at 0.8165 and saw a nudge up from 0.8155 to 0.8189 on light short covering. Most showed little interest in getting involved ahead of the weekend and holidays beginning next week. Previous support at 0.8200-10 looks to work as resistance going forward. Bears continue to target 0.8066, the low in May ’10 with calls already from some for sub-0.8000 in early ‘15.

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