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Yen Selloff Continues on Strong Stocks and Yields, Sterling Lifted by Hawkish BoE Comments

Yen’s selloff continues as another week starts, backed by rebound in Asian stocks and Japanese yield. Indeed, 10-year JGB yield, currently at 0.093, is on track to 0.1 handle. Sterling is currently the strongest one, as lifted by hawkish comments from BoE officials over the weekend. Australian Dollar is following closely, leading other commodity currencies up too. Dollar, Euro and Swiss Franc are on the softer side.

Technically, 130.45 resistance in EUR/JPY would be a focus today. Firm break there would indicate completion of correction from 134.11, and pave the way to retest this high for the near term. More importantly, that would also align EUR/JPY’s outlook with other Yen pairs, confirming broad based weakness in the Japanese currency.

In Asia, at the time of writing, Nikkei is up 1.57%. Hong Kong HSI is up 2.23%. China Shanghai SSE is up 0.38%. Singapore Strait Times is up 0.11%. Japan 10-year JGB yield is up 0.0058 at 0.093.

BoE Saunders: Appropriate to price in a significantly earlier path of tightening

BoE hawk Michael Saunders said over the weekend, “markets have priced in over the last few months an earlier rise in Bank Rate than previously and I think that’s appropriate.”

Saunders noted that markets have fully priced in a February hike, and half priced a December hike. “I’m not trying to give a commentary on exactly which one, but I think it is appropriate that the markets have moved to pricing a significantly earlier path of tightening than they did previously,” he said.

Separately, BoE Governor Andrew Bai