USD/JPY rallies above 120.00 after FOMC minutes

USD/JPY saw marginal gains in Asia, rising from 120.08 to 120.39. Official Japanese pension funds were good buyers. Offers remain pre-120.50 but stops are eyed above. A break above projects a test of 121.00 where US$1.37 bln in vanilla option expiries are tipped. So-so large $565 mln in 120.00 expiries look to help support the downside alongside more bids from Japanese investors. Light trader stops are mixed in sub-120.00. MoF flow data confirmed sizeable Japanese foreign bond sales in the week-ended April 4. Volume then was very high however, suggesting plenty of fresh buys too. With Japan’s fiscal year-end out of the way, Japanese investment abroad looks to pick up again, and as evident in continuing purchases of foreign stocks. EUR/JPY got a lift alongside USD/JPY, bouncing from 129.42 to 129.73. The risk remains down however. GBP/JPY got a leg up from 178.49 to 179.04, extending gains from a low of 178.40 late in New York and 176.43 on March 26. AUD/JPY too was bid, up modestly from 92.12 to 92.65 and perhaps back into its 92.57-93.83 Ichimoku cloud. NZD/JPY bounced from 90.52 to 90.95.

EUR/USD opened in Asia at 1.0781 after EUR underperformance overnight as a funding vehicle for fresh carry trades. To wit, EUR fell roughly 1% against both AUD and NZD. Fresh pressure was seen early in Asia as USD firmed across the board and led by USD/JPY demand out of Tokyo. After edging below yesterday’s 1.0763 low to 1.0760, it ran into some bids and bounced back to 1.0788. Sentiment remains bearish with EUR likely to remain the favored funding currency for carry trades and as USD continues to recover after the surprisingly weak US payroll data last week. Talk reserve managers are quietly moving out of EUR and back into USD on negative EZ short-term yields and the likelihood of further EUR weakness due to ECB QE efforts and uncertainty over Greece.

GBP/USD was better bid in thin Asian trading. From an early low of 1.4852, it recovered to 1.4886. It still was an inside day with 1.4807-1.4972 seen yesterday. The market does look to have calmed into upcoming UK elections. EUR/GBPdid little, holding between 0.7243-51.

USD/CHF did little in Asia, holding bid between 0.9663-83 after yesterday’s push up from 0.9599 to 0.9678. Few flows were recorded. EUR/CHF steadied between 1.0417-31 in Asia after last night’s push down to 1.0409.

AUD/USD opened in Asia at 0.7684 and traded soft early on profit taking after a stellar performance overnight and especially against EUR on fresh carry trades. A bounce from 0.7660 to 0.7703 ensued. With the market in possible doldrums for the next couple of months with any Fed lift-off possibly months away, carry demand could very well continue and propel AUD significantly higher.

The post USD/JPY rallies above 120.00 after FOMC minutes appeared first on Forex Circles.

Source:: USD/JPY rallies above 120.00 after FOMC minutes

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