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  • USD/JPY holding in a narrow range of between a low of 108.64 and 108.76 so far.
  • Ears to the ground for Brexit headlines, stealing the show.  

USD/JPY stuck to a narrow 108.60-108.85 range overnight and the pair has shown little sign of budging in Asia today so far. There have been some less than optimistic trade headlines overnight and while Brexit appears to have made some progress, there is still a fine line to cross between all systems go and Brexit another hic-up.

USD/JPY is currently trading at 108.69 having travelled between tight range of between a low of 108.64 and 108.76 so far on a relatively quiet session. Markets were indeed dominated by Brexit headlines, snippets here and there of trade-related headlines and US data were mixed. A drop in retail sales raised concerns about the momentum in consumption, although the NAHB housing index rebounded to its highest level in 21 months.  

Brexit steals  the show

Fed funds futures showed expectations over a 25bp insurance cut from the FOMC later this month intensifying, yet stocks ended a touch lowe due to the Retail Sales and a murmur of Chinese retaliation for the US’s position on Hong Kong which poured cold water on the positive trade deal sentiment.

As for Brexit, analysts at Westpac explained that “although no Brexit breakthrough has been confirmed, the impression is that on the eve of the EU Summit there could still be the draft of a deal. This may be too late for full signoff at the EU summit, but it may allow for EU-27 to return before the end of the month to sign off on a fully detailed withdrawal agreement.”

Meanwhile, the US 2-year treasury yields ranged sideways between 1.57% and 1.61% while the 10-year yield moved between 1.72% and 1.76%. “Markets are pricing 20bp of easing at the 30 October meeting and a terminal rate of 1.21% (vs 1.88% currently),” the analysts Westpac noted.

USD/JPY levels