USD/JPY Volatility Jumps as BOJ Hike Risk Returns

USD/JPY volatility has returned to the spotlight after a sharp yen move late in the Asian session initially raised questions over whether Japanese authorities had stepped back into the market.

The move followed comments from Bank of Japan policymaker Hajime Takata, who argued for a more nimble approach to adjusting interest rates as policymakers respond to inflation. That potentially increases the importance of each BOJ meeting and puts the path for Japanese rates firmly back into focus.

 

 

 

USD/JPY Faces BOJ and US Data Risk

The latest move comes at an important point for USD/JPY. Volatility has increased, trading volume has picked up and price is approaching an area where the reaction could provide useful clues about the next directional move.

But traders also have a significant US data hurdle ahead. ISM services and nonfarm payrolls could materially shift expectations for the Federal Reserve and therefore the US-Japan rate differential that remains central to USD/JPY.

In the video, I look at the latest price action, the levels that could matter from here and whether the sudden increase in yen volatility should be treated as the start of something larger or simply another short-term move.

I also examine USD/JPY behaviour around previous NFP reports and what futures positioning tells us about speculative exposure to the Japanese yen.

Watch the video for the full USD/JPY analysis, NFP volatility study and yen positioning outlook.