USD/JPY bears were off to a slow start in the Tokyo open, but the supply trickled in and is pressuring the 101 handle into submission following a poor performance for US stocks overnight driven by risk off flows.
Bank of Japan Sept 'Summary of Opinions': CPI on a declining trend
Risk aversion was supporting a bid in the Yen to highs of 100.83 before the greenback drove the Japanese currency back to 101.20 area's resistance in the handover in early Asia. "The S&P 500 was dragged lower by financials, with concerns over one entity weighing in particular, and reporting by Bloomberg that some funds had withdrawn excess cash and positions held," explained analysts at ANZ, "It’s reminiscent of 2008, and has a “Groundhog Day” feel to it".
Economic wrap: key U.S. data was decent - Westpac
Deutsche Bank was again the entity that drove end of quarter flows towards safe havens while the idea of a Fed hike coming in either November, of which Fed's Lacker said today was "a live" meeting, encouraged the bears to come out on Wall Street. Meanwhile, on the data front, Japanese CPI was lower and US data has somewhat improved ahead of the close and next week's NFP's. We now await further Japanese data on Monday. "Monday’s releases of the September Tankan and US ISM data may test views about underlying growth momentum in Japan and the US, explained analysts at BTMU, "BoJ monetary policy operations will reflect the reality of controlling the yen yield curve under QQE. This could test USD/JPY direction ahead of the US non-farm payroll report next week, and USD/JPY could decline gradually in line with our scenario."
USD/JPY levels
With spot trading at 101.14, we can see next resistance ahead at 101.45 (Daily 20 SMA). A move through the four month downtrend at 102.27 would be required to alleviate near term pressures. Near term support below can be found at 101.04 (Daily Open), 101.00 (Hourly 200 SMA) and 100.92 (Daily Classic R1). A break at the key support line below 100.00 opens 99.55 and the August low ahead of 99.00 and the June low. 96.40 is the top of the weekly cloud.
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