[Original Author, by Nigel Ng]
There are multiple reasons to be bullish JPY at USDJPY 137. From a technical perspective, that’s just slightly below the level where we bounced on the 10Y band widening, and also where the 100 and 200 day moving averages cross. DXY is also at a similar level, at the level where the December supports were.
The 10Y yield traded above 4% for only two trading days, where bonds came back strongly. Today, the chinese NPC expected only 5% GDP growth, a lower number compared to the previous estimate. This contributes to my bond bull thesis as we are about to reach peak Fed pricing and attractive levels in yields, and I believe that January data came in hotter than expected due to the ‘January blip’.
Tokyo CPI came in slightly higher than expected, and given how Ueda wears MIT stripes, I believe he’s academically inclined to do the orthodox policy and risks remain to the hawkish side. I remain bullish JPY into BOJ, NFP, and CPI.