Lots happening into the month end and plenty of action in USDJPY
Both K-Man and Patrick have been all over the month-end action.
K-Man was in early and advised us what to expect this week, while Patrick had some extra colour on some of the bank’s expectations for flows, today. We’re all about digging out the most important trading information we can, and we’ve got some further news on the flows.
Japanese exporters are on the offer around 107.00/20, and layered all the way up to 108 (possibly further). But also, Japanese importers are said to be on the bid from 106.50 down. That’s all well and good and offers us two areas to trade with, in the knowledge that we have some potential backstops. However, what we could see is those offers or bids stepping down/up as we roll into the last day tomorrow. It could come down to who has the biggest business to get done before the end of the month. That’s going to make the fixes vitally important. We’re going to have to be eagle eyed for the 16.00 fix as well as the Tokyo fix at 00.50 but be prepared to see some moves over the more minor fixes at 11.00 GMT and 13.15 GMT.
There’s many USD traders sitting back and waiting on Fed’s Powell later today so these EoM flows are likely to dominate the price action. I’d be looking for 107.20/30 for very tight shorts, while also looking to buy just ahead of 106.50, again keeping it very tight, and I’m talking maybe 10/15/20 pips max on a stop. I possibly won’t be looking to hold anything over Powell though.