Japanese Yen: Steadies as USD/JPY rally tires – Scotiabank
Scotiabank strategists Shaun Osborne and Eric Theoret report the Japanese Yen (JPY) is slightly firmer, outperforming G10 peers despite broad US Dollar (USD) strength, as stronger PMIs signal improving growth. They see signs of exhaustion in USD/JPY’s advance with yield spreads stabilizing. Near term, they flag limited resistance before 162 and now expect initial support around 160, implying a more balanced risk profile after the recent surge.
Gains stall near 162 resistance
"The yen is entering Tuesday’s NA session with a fractional 0.1% gain as it outperforms all of the G10 currencies in an environment of broad-based USD strength."
"Japan’s latest preliminary PMI’s offered a continued improvement in the pace of growth, with both manufacturing and services improving on the month."
"The Services PMI climbed into marginal expansion territory while the manufacturing PMI pushed into the mid-50s, suggesting robust levels of growth."
"USD/JPY’s gains are showing signs of exhaustion and yield spreads appear to have stabilized."
"Technical resistance is limited ahead of 162 and near-term support is now expected at 160."
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