USD/JPY steady ahead of Japan elections

USD/JPY and JPY crosses saw nervous, non-directional to-fro action in Asia. All traded on higher planes after falls earlier this week as massive JPY shorts were pared back. The rally on Wall Street after good US retail sales data and a more risk-on feel (Nikkei up) supported the complex along with higher US yields initially. Talk of GPIF buys/PKO yesterday and Wednesday after moves down into the 117-handle played a part in USD/JPY’s rebound. It traded 118.69-119.21 initially with much of the action between 118.90-119.10, the market obviously feeling the pull of large, expiring 119.00 vanilla options (1.245 bln). A late push down to 118.50 was seen as US yields eased off. Bids remain around the low. EUR/JPY also saw to-fro action between 147.31-71 before a late push down to 147.00. It is within a wider, 145.95-148.12 range bordered by its daily Ichimoku kijun and tenkan lines. GBP/JPY traded 186.35-187.32, in a holding pattern below yesterday’s 187.73 retracement high. AUD/JPY traded 98.02-40 after this week’s spike down to 97.44. NZD/JPY fell a leg from 92.90 to 92.40, retracing a bit more from yesterday’s 93.30 high.

EUR/USD and the EUR complex did little in Asia as has been the recent wont with the market hunkering down for the weekend and volatility elsewhere easing back. EUR/USD was stuck between 1.2390-1.2411, feeling the gravitational pull of large E1.231 bln in 1.2400-strike vanilla option expiries. The bias is down again with Grexit talk still making the rounds and after the rejection ahead of 1.2500 option barriers yesterday (1.2496 high). Support is eyed at 1.2360-70, 70 the low yesterday and 62 the low Wednesday. Trader stops are eyed sub-1.2360. Larger stops are eyed above 1.2500 still. EUR/GBP did little, treading water between 0.7882-89 after pushing down from 0.7955 to 0.7880 in New York yesterday. EUR/CHF was immobile between 1.2011-14, having fallen too from 1.2038 to 1.2010 last night. Most strategies again favor selling strength.

GBP/USD did little in Asia, holding between 1.5714-37.

USD/CHF too did little, holding between 0.9679-94.

AUD/USD closed in New York at 0.8271. Asia saw it trade see-saw between 0.8242-82. Dips towards the low were met by bids and moves up towards the high with offers. Modest AUD/NZD gains from 1.0562 to 1.0613 proved supportive. A slew of upcoming China data releases kept intra-day spec positions light. The OIS market has chosen to ignore Gov Stevens forecast yesterday of an AUD/USD fall, maybe to 0.75 which is seen neutral for growth, continuing to imply 32 bps of RBA rate cuts over the next year.

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