March 23rd - Dollar-Yen has been through something of a volatile period during the Asian session, rallying from lows around 116.60 to touch 117.30 before staging a quick reversion. With little meaningful economic data being released, this volatility is largely reflecting uncertainty over future rate movements from the FOMC – a 25 basis point hike is still considered as a given at next week’s meeting, but precisely what happens next remains open to debate. There’s certainly been a run of lacklustre economic data out of Washington of late and after mortgage lending fell earlier in the week, expectations will be that the new and existing home sales numbers will also tail off ahead of the weekend break. Weekly jobless claims are also due for release today and although any unexpected numbers could offer further support to the greenback in the near term, expect the cautious theme – and accompanying volatility – to remain over the next few days. The Japanese industrial activity index for January is due for release later tonight so again this could offer some support for the Yen, but after the last BoJ monetary policy meeting, again there’s little consensus in the market as to when rates will rise and cash yields improve. All told, it’s difficult to see where the sustainable direction for USD JPY may come from ahead of the FOMC verdict next week.
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