Technical Analysis

ForexLive Asia-Pacific FX news wrap: USD/JPY volatility continues & there’s more to come


The
Bank of Japan is meeting today, its policy decision will be handed
down tomorrow sometime after 0230 GMT (which is 2130 US ET). The Bank
intervened in the Japanese Government Bond market yet again today,
buying the 10yr JGB. The yield on the 10 year JGB rose above the
BOJ’s ceiling at 0.5%.

USD/JPY
rose with the BOJ JGB buying, from lows circa 128.25 it hit highs
above 129.00. Overnight
implied volatility ahead of tomorrow’s meeting has hit a six-year
high of 51%. Volatility is assured into and after the BOJ statement.

Other
major FX traded in more confined ranges.

The
data releases of focus were China’s Q4 GDP:

  • this
    came in better than expected but did show y/y growth was one of the
    lowest ever recorded (see bullets above for more)

and
China’s December economic activity:

  • activity
    data is centred on 3 indicators: industrial production, retail sales
    and fixed asset investment. All
    three came in better than expected (again, see bullets above).

On
central banks, the Japanese government said it’d be presenting the
names of the nominees for the next BOJ Governor and Deputy Governors
to the Diet (the Japanese parliament) on February 10. Bank of Japan
Governor Kuroda’s term expires on April 8 and BOJ policy change is
expected after this. It may come sooner, though, given the selling
pressure being heaped on Japanese Government Bonds.

China’s
Securities News reported that the People’s Bank of China could cut
interest rates and the Reserve Requirement Ratio (RR) as soon as this
quarter.

Asian
equity markets:

  • Japan’s
    Nikkei 225 +1.2%

  • China’s
    Shanghai Composite -0.25%

  • Hong
    Kong’s Hang Seng -1.1%

  • South
    Korea’s KOSPI -0.5%

  • Australia’s
    S&P/ASX 200 -0.2%

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