Societe Generale highlights USD/JPY trading near 160, with dips bought despite lower Oil and expectations of a 25 bp BoJ hike. They stress that a BoJ move is seen as a foregone conclusion, but focus on what might narrow 2-year UST/JGB spreads and ease intervention pressure, as speculative short Japanese Yen positioning has reached multi-year highs.

Yen under pressure despite BoJ hike

"USD/JPY: 159.74 - 160.28 overnight range."

"Dip bought despite lower oil and prospect of 25bp hike by BoJ tomorrow, hints at positioning for hawkish Fed hold."

"Support 159, resistance 161.20."

"For USD/JPY in particular the stakes are running high."

"The 25bp rate hike by the BoJ should be a foregone conclusion tomorrow but what exactly will cause 2y UST/JGB spreads to narrow and lift pressure to intervene?"

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)