The USD/JPY remains bid this morning at 115.50/55 with various rate rumors
helping to fuel the JPY weakness over the last two sessions. One rumor
circulated overnight (and apparently began the day before) was that the BOJ may
only raise rates by 10 bp rather than the expected 25 bp. There is another rumor
that the overnight call rate will be raised to 25 and the official discount rate
to 35 bp, leaving only a gap of 10 bp. Current forecasts see a 25 bp rise in the
overnight call rate and 40 or 50 bp in the discount rate. In addition, there are
rumors that the central bank will emphasize that any move higher in rates will
be slow and will dampen speculation of further near term rate hikes. A rumor in
the JGB market last night suggested that the BOJ actually called banks to quash
fears of further quick rate hikes.
USD/JPY offers remain at 115.75 to 115.85 after a high of 115.73 today. Small
stops are tipped above 115.85 with more selling interest is noted towards
116.00. |