ASIA-PAC FX UPDATE: JPY in focus on more suspected intervention, DXY wobbled but reclaimed 112.00

Analysis details (03:02)

In FX, DXY kicked off trade under the 112.00 mark with a low of 111.51 on Sunday but briefly topped the psychological level as the JPY initially unwound some of Friday’s intervention-induced gains, which saw a move from above 151.00 in USD/JPY to a fall under 146.50, with the pair back above 149.00 from a 147.50 intraday low in early APAC hours. During the session, some downticks were seen in USD/JPY as Japan's Top Currency Diplomat Kanda refrained from commenting on whether they intervened in FX markets but stressed there is no change in stance that they are ready to act 24/7 and will continue to take appropriate action. Later, the pair saw a sudden move in which USD/JPY dropped around 200 pips in one minute before extending on losses to a low of 145.50 from around 149.50 over seven minutes, with traders flagging potential Japanese intervention – with DXY falling back to around 111.50 from session highs as a result. However, JPY then trimmed earlier gains with USD/JPY back on a 148.00 handle at the time of writing and the DXY back at levels above 112.00. Elsewhere, the Sterling stands as the outperformer at the time of writing as the British currency cheers the high probability of market-friendly Rishi Sunak becoming the next UK PM after Boris Johnson dropped out of the race. GBP/USD briefly topped 1.1400 and came close to its 50 DMA (1.1413) in the early hours before retreating back below the level as DXY marched higher. Other G10 peers are relatively flat against the USD. EUR/USD saw some resistance near the 0.9900 mark where its 50 DMA lies at 0.9897. NZD/USD resides above 0.5750 whilst New Zealand markets observe the Labor Day holiday. AUD/USD pulled back under 0.6400 in early trade, whilst RBA's Kent reiterated the Board expects to increase interest rates further in the period ahead, with the size and timing of rate increases in Australia will depend on incoming data but downplayed the effect of the AUD weakness on inflation. Meanwhile, Morgan Stanley remains bearish on the AUD, and looks for it to go lower against the NZD - "We believe the RBA's pivot earlier this month signals a fundamental shift from that central bank which will weigh further on both AUD/USD and AUD/NZD," the desk said. AUD/NZD moved back under 1.1075 but remains within a tight 1.1059-77 range thus far. The Yuan meanwhile saw the weakest PBoC fix since June 1st 2020 and saw little volatility to the myriad of delayed Chinese economic data released alongside the Chinese cash open.

24 Oct 2022 - 03:01- Research Sheet- Source: Newsquawk