• AUD/JPY +1.0%
• USD/JPY +0.9%
• GBP/JPY +0.9%

AUD/JPY

Foreign Yields Remain Attractive: In light of rather bullish undertones in today's Bank of Japan minutes release, bears pounded the Japanese denomination as domestic investors were seen siding with foreign debt.  Even though suggestions were made of tightened money supply in the world's second largest economy, the fact of the matter remains that individuals desire higher yields.  As a result, with Australian benchmarks set higher at 5.5 percent, investors flew to capture the higher rate.  Additional speculation on tomorrow's business survey looms over the rise with expectations for bullish suggestions on the back of a "no-change" decision by the Reserve Bank of New Zealand.  Recognizing that rates would more than likely not rise in the near future, Governor Alan Bollard included that the "possibility cannot be ruled out until we see clear evidence of a sustained weakening in domestic demand."  The statements lend to further belief that inflation continues to be a concern in the New Zealand economy and may spill into the Australian region prompting further rate hikes.

Technically Speaking: Rising to the topside of the recent channel visible in the longer daily time frame, Stochastic is showing overbought extension currently in the market as bulls are stopped short of the December 15th hourly high at 87.15.  Establishing the upper trendline, a downside reversal looks possible with barriers being posed at 87.10 (10-hour moving average) and 86.92 (23.6% fib level from the 85.74-87.32 advance).  Considerable capping above 86.53, site of previous consolidation, serves as a bottom before a reestablishment of upside direction can occur.  Additionally lending to downside bias is the death cross currently forming in the oscillator.  Should the current ceiling not hold, bulls can expect no resistance on an onslaught of the 88.00 figure.

Rumorville: Initial bidding looks to mustering at the 87 figure with stronger support coming in at 86.05/10, near today's low at 86.13.  Heavy bids at 85.70 look to cap any intraday downside or provide a stronger barrier heading into the close.  To the upside, selling pressure can be found at 87.50,the daily low on November 24th as heavier resistance is seen above at 87.95.

USD/JPY

Treasury Auction Worries Yen Bulls: Traders sold off the yen in the New York trading session as a $22 billion auction of 2-year treasury bills was anticipated to hit the market today.  With yields in the Japanese economy still hovering at zero percent, market participants saw a flight to higher yielding currencies such as the U.S. single currency.  Subsequently, against the greenback, the spread has widened 425 basis points and looks to widen yet again as players price in a 25 basis point rate hike at the end of January.  However, the effects of current dollar bidding look to be only temporary as investors look to return to Japan's infrastructure, which has recently been on the up and up.  Next, on the docket, looks to be the consumer prices report and retail trade figures.  Higher figures would propel yen bulls as it confirms a bounce back from eight years of deflationary conditions.

Technically Speaking: Trading within the confines of current longer term consolidation in the daily, bulls bid the pair higher briefly past the 115.91 January 17th hourly high.  Next up for bidders is the 116.41 resistance ceiling, site of consolidation in the first week of January.  To the downside, bears have to look forward to 115.65 (10-hour moving average) as the first barrier with heavy support at 115.25 (confluence of the 38.2 percent fib from the 114.11-115.19 advance.  Consequently lending to downside notion prior to further upside looks to be a death cross forming in overbought territory in the Stochastic.

Rumorville: Dollar bidding looks to reside at 115.25 with heavier considerations at the 114.85/90 area.  Daily lows on January 13th and 23rd serve as bottom feeding support at 114.15 and 113.75/80.  Comparatively, with significant resistance at 116, offers can be found slightly above at 116.45 with heavy considerations capped above at 117.

GBP/JPY

Further Upside Potential For Pound Bulls: Furthering the momentous bull wave that was sparked on January 12th, GBPJPY bidders pushed the price action higher to test the December 15th high of 207.45.  Now ripe for a temporary retracement, further buying on dips looks to ensue on a retest of the 10-hour moving average at 206.51 and 205.88 (confluence of the 23.6 percent fib from the 201.98-207.19 advance and 20-hour moving average).  A break below would likely be capped at 204.58 (50 percent fib from the 201.98-207.19 advance) before continued upward bias resumes.  Should the aforementioned floor not hold, bears would be prepared for a retest of the 201 bottomside trendline.

Rumorville: British pound bidding looks to be established at 205.30, the December 22nd high.  Heavier considerations currently at 204.45 precede final supporters at 203.45.  On the flipside, offers look to be coming in at 206.90 with stops just above at 207.15/20, capping the intraday jump.  Upside capping looks to take place at 208.25, the 61.8 percent fib from the 213.05-200.55 decline.

Richard Lee is a Currency Strategist at FXCM.