USD/JPY teases Tokyo intervention near 32-year high above 150.00 despite strong Japan inflation, yields

• USD/JPY picks up bids to renew intraday high near the multi-year top marked on Thursday.
• Yields remain firmer amid fears of high inflation, and recession.
• Japan’s Core CPI jumped to the highest in eight years, stronger for the sixth consecutive month.
• BOJ again plans for emergency bond buying but policymakers resist meddling in the market and defend buyers.

USD/JPY stays mildly bid as it pokes the 32-year around 150.25-30 during Friday’s Asian session. In doing so, the yen pair rises for the consecutive 13 days while poking the highest levels since 1990 amid strong yields and the Bank of Japan’s (BOJ) defense of the easy money policy.

It’s worth noting that Japan’s inflation data refreshed a multi-year high earlier in the day, which in turn exerted more pressure on the policymakers to intervene in the markets and safeguard the yen. That said, “Japan's core consumer inflation rate accelerated to a fresh eight-year high of 3.0% in September, exceeding the central bank's 2% target for the sixth straight month as the yen's slump to 32-year lows continues to push up import costs,” said Reuters.

Following the data, Japanese Finance Minister Shunichi Suzuki said on Friday that authorities were dealing with currency speculators "strictly", as an extended sell-off of the yen kept markets on heightened alert for further dollar-selling intervention by Tokyo. Also, the BOJ announced emergency bond-buying operations for a second consecutive day and increase the amount of bonds it is buying for its scheduled operations, per Reuters.

Elsewhere, US Initial Jobless Claims eased to 214K for the week ended on October 07 versus 230K expected and a revised down 226K prior. Further, Philadelphia Fed Manufacturing Survey Index dropped to -8.7 for October versus the -5 market consensus and -9.9 previous reading. Additionally, US Existing Home Sales rose past 4.7M expected to 4.71M but eased below 4.78M prior. Recently, Federal Reserve Governor Lisa Cook mentioned that ongoing rate increases will be required.

Amid these plays, the US 10-year Treasury bond yields refreshed a 14-year high the previous day, around 4.22% by the press time. Also, the two-year US Treasury yields rose to the highest levels since 2007 before recently taking rounds to 4.62%. Further, Wall Street closed in the red following an initially upbeat performance while the S&P 500 Futures extend the previous day’s losses with 0.50% intraday downside at the latest.

It should be noted that the escalating hawkish Fed calls, versus the BOJ’s dovish done, also underpins the USD/JPY pair’s upside momentum. That said, the CME’s FedWatch Tool suggests a near 98% chance of the Fed’s 75 bps rate hike.

Moving on, any market meddling from the Japanese policymakers will be closely eyed and can trigger the USD/JPY sell-off. Until then, the bulls could keep the reins. Also important to watch will be the last dose of the Fed speakers’ comments before the blackout period preceding November’s Federal Open Market Committee (FOMC) meeting.

Technical analysis

Unless declining back below the six-month-old support line, around 149.70 by the press time, USD/JPY remains bullish.