Spot JPY: Month-end

From the FXWW Chatroom: USDJPY has continued to rally hard, as the market finds any pocket of pain and squeezes. We are now a stone’s throw from the key 55d MA and 100d MA at 111.20, which will be important levels to keep in mind if the US PCE and NFP data is good over the next few days. Today brings a noisy month-end rebalancing as well, with Citi’s models suggesting USD buying, after lackluster performance from US equities this month.
Personally, I am smalls long USD at the moment going with the momentum. I know that I’ve been saying this for a while now, but US fixed income currently looks rich, with a little more than one hike priced in through the end of 2018. If ADP is any indication (and it has been erratic recently), then the next two data prints have upside risk, which would change the conversation around USD and the Fed.

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