Yen Outlook
20:56 GMT April 21st USD/JPY opened NY at 98.08. A sour mood in the equity arena sent spot initially lower. The 97.81 low was hit at the equity market open but European names buying EUR/JPY and GBP/JPY prevented further declines. Options held the market stable at 98.00 while sentiment improved after better- than-expected industrial earnings and M&A news. Trys Sctry Geithner added that most banks have adequate capital and a separate story broke that auto bailout funds would be extended upon a restructuring. The IMF put its two cents by saying the total toxic bill is approx. $4trln. USD/JPY ran past stops at 98.50, found Japanese offers above 98.60, then pushed higher again as oil prices recovered. Cross JPY traded in a similar fashion with shorts running for cover by the London close. USD/JPY settled just below the 200 day MA of 98.87.
Lifers have been active FX investors of late and there is some talk that uridashi issue could push the JPY weaker. On the flipside, macro funds are more than willing to buy cheap JPY vol and there is a concern about higher rates in Japan. The IMF meeting this weekend may reaffirm the JPY"s relative value.
(RMF)
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