USD/JPY edges closer to 120.00

USD/JPY continued to grind at pre-120.00 offers. Asia saw it up from 119.74 to 119.94, marginally higher than the 119.87 in late New York trading o/n. Stops are large above 120.00 option barriers and remain a magnet for specs alongside negative gamma. Profit-taking is eyed on an initial break above but more moves up are eyed with increasing Tokyo calls for as high as 130. Large, $2.21 bln option expirations at 120.00 could help limit the upside for now. So-so large $660 mln in expiries at 119.75 look to help limit moves back down alongside bids from Japanese importers and investors on dips as has been the recent wont. EUR/JPY was also better bid between 147.45-64 but with players more ambivalent over further upside on very possible ECB ease, if not tonight than soon. GBP/JPY was stuck just below yesterday’s 188.18 trend high between 187.77-188.17, still on course for test of 190 near-term. CAD/JPY was also bid, holding between 105.16-37 and just below yesterday’s 105.47 high with BoC Gov Poloz more sure of growth and the BoC less dovish than thought. AUD/JPY see-sawed between 100.44-91 with better data trumped by RBA easing bets. NZD/JPY see-sawed in sympathy between 92.70-93.03.

EUR/USD opened in Asia at 1.2311 after falling to a fresh two-year low of 1.2301 on weaker EZ services PMI and broad USD strength. Asia saw it meander between 1.2307-20 on few if any flows. The market is pricing in a dovish ECB as reflected in the fall in EZ and peripheral EZ bond yields. Clarification on how close to sovereign bond purchases looks to be the focus along with fresh inflation forecasts and any urgency in countering deflationary pressures. Anything less dovish could see EUR/USD correct ahead of Friday’s key US payrolls report.

GBP/USD see-sawed in Asia, up from 1.5682 early to 1.5709 and then back down to 1.5677 ahead of the BoE MPC policy announcement later today. Most are resigned to no change in policy for some time. EUR/GBP did nothing, holding between 0.7844-49.

USD/CHF remained better bid between 0.9768-80 in Asia with few flows noted. EUR/CHF also did nothing, in a holding pattern between 1.2032-36.

AUD/USD opened in Asia at 0.8401, content to hold just above 0.8400 o/n. Under pressure early with specs eyeing supposed stops sub-0.8388, it fell to a fresh trend and four-year low of 0.8385 before drifting back to the figure into data releases. The much better than expected retail sales and trade data saw AUD/USD race to 0.8429 before being capped by offers at 0.8430-40. These gains were later unwound with RBA easing bets trumping today’s better data.

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