USD/JPY finds equilibrium of sorts on 143, 144
Oct 2 (Reuters) -USD/JPY looks to be calming down on the 143 and 144 handles after recent volatility around U.S. Federal Reserve and Bank of Japan decisions as well as Japan's change in leadership.
USD/JPY fell to 139.58 on Sept 16 ahead ofthe Federal Open Committee's50 basis-pointrate cut on Sept 18. Hawkish BOJ expectationshelped. USD/JPY thenrebounded to 146.49 on Sept 27 on the view that, while still holding to a hawkish bent, any furtherBOJ rate hikes will be gradual and laterthan previously expected.
While there has been some USD/JPY volatility since,the market seems to have found asemblance of equilibrium between 143.00-145.00. Large option expiries on 143 and 144 willhelp contain spot action. Massive expiries at 145.00 Wednesday and Thursday shouldcap the upside.
Tokyo players see this equilibrium potentiallyholding into the U.S. jobsreport due Friday.
The Reuters poll forecasts a modest 140,000 rise in September non-farm payrolls. Unemployment is expected to remain at4.2%. Average earnings are expected to rise 0.3% month-on-monthand 3.8% annuallyagainst Augustrises of 0.4% and 3.8%, respectively.
Numbers better or worse than expectations could see volatility spike again. A much softer-than-expected report and concomitant moves in U.S. yields could see USD/JPY test towards the Sept 16 low. Support below is eyed towards 138.05, the end-July 2023 low.
A much stronger report could see USD/JPY test resistance around 145.00. Resistance above is foundaround the descending 55-daymoving average currently at 146.45 and then the Sept 27 high.
For more click on FXBUZ
USD/JPY: https://tmsnrt.rs/3ZOEEey
USD/JPY nearby option expiries this week: https://tmsnrt.rs/3N8wRAJ
JGB-US Treasury 2-year rate differential: https://tmsnrt.rs/47XjzAD
Haruya Ida is a Reuters market analyst. The views expressed are his own. Editing by Sonali Desai
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