USD/JPY resilient on importer buys, downside limited
May 10 (Reuters) -USD/JPY has rebounded sharply after the plunge from 160.24 on April 29 to 151.86 following suspected rounds of interventions by the Bank of Japan [https://x.com/DeItaone/status/1788214322268659896]. It looks to be consolidating now around 155, and may continue to tradeon a one-yen range either side of the 155-handle barring any surprising U.S. economic news (perhaps CPI May 15) and moves in U.S. interest rates.
Japanese importer demand has been strong following Japan's Golden Week holidays with this bloc on the bid every day and especially on dips. This demand helped push USD/JPY to 155.95 on May 9 and again on 10th after the early Asia swoon to 155.27.
Japanese importers have to buy with option buy-structures put on in previous months effectively taken out on moves through knock-outs at 152.00, 155.00 and 160.00. Japanese retailers, saddled with JPY long positions ahead of 155 on hopes of Ministry of Finance-ordered BOJ intervention, have recently been on the bid too.
Given the above, the USD/JPY downsidelooks limited. Techs are supportive too below. The latest rebound came after the trade down to the area of ascending 55-day moving average at 152.21 on the 10th.
The upside appears constrained too with recent data suggesting the U.S. labour market may be cooling nL1N3HC19L, and U.S. yields could be capped for now. Key to U.S. rates look to be the PPI release on May 14 and especially CPI on May 15. The U.S. Treasury 2-year yield seems to have peaked for now at 4.857% and that on 10s at 4.520% on May 9.
The market also remains cautious on any follow-up FX intervention, especially on USD/JPY moves of over two-yen per day nL1N3HB0A0, nL2N3GY493, nL2N3GE04H.
For more click on FXBUZ
USD/JPY: https://tmsnrt.rs/4b8XiRi
Yield on US Treasury 2s: https://tmsnrt.rs/44zspTy
Markets remain on yen intervention watch: https://reut.rs/4a7WWZP
(Haruya Ida is a Reuters market analyst. The views expressed are his own)
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