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Asia Recap: Yen depressed as tax delay looms

FXStreet (Bali) - The Asian session exhibited low G10 FX activity with the only exception of the Japanese Yen, which saw some greater selling interest amid anticipation of a tax delay/snap elections.

USD/JPY saw an early spike in Tokyo, as evidence mounts over looming Japanese snap election and a consumption tax hike delay, both events seen as Yen negative/Nikkei positive by the market. The initial rally, however, stopped dead at 116.20, where Japanese corporate selling was reported, with the rate pulling back towards 115.75 before further Japanese dip buyers stabilized the price along the 116.00 line. The pair remains quite whippy and is being traded on a headline-by-headline basis, creating plenty of dangerous noise for those looking to pick some scalp money.

The rest of currencies saw little action, with USD/JPY early strength sparkling a bout of USD demand across the board, which added some pressure to the Aussie, despite no technical damage, as 0.8675 still holds. Against the Kiwi, the selling intensified, with lows at 0.7850 printed. Versus the Euro, the Greenback remains in a contracting wedge which should see a resolution later today on EZ GDP/ US Retail Sales catalysts. Lastly, the Pound remained offered outright, unloved since the BoE Inflation Report, in which an unambiguously dovish stance caught the market a by surprise, with 1st rate hikes in the UK now not expected until late Q3 2015, being optimistic, given the inflation picture painted by policy-makers.

Key headlines

Japan PM Abe to announce a delay in sales tax next week - Mainichi Shimbun

ECB’s Noyer: No problem buying govt bonds if rates rise, EZ suffers negative shocks

Gold referendum irrelevant for EURCHF floor - TDS

Is Abenomics about to go 'ALL-IN' on the reflation game?

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