[MARKET ANALYSIS] JPY strengthens as Katayama vows for further domestic investment by pension funds

DXY continues to trade on the softer side, currently at the low end of its 100.73-100.94 range. The recent downward pressure came amid comments by Japanese Finance Minister Katayama, which lifted Japanese assets (see JPY below). Geopolitical newsflow has been light, allowing energy prices to rotate in tight ranges and having a limited effect on the USD.
EUR and GBP follow on from Thursday’s modest gains, with EUR/USD just shy of Thursday’s peak of 1.1449 while GBP/USD breaches the prior day’s high. No specific regional driver for the recent upside; just benefiting from a softer USD.
USD/JPY slips back below the 162.00 handle, and currently trades just shy of its session low of 161.64, after peaking at 162.43 earlier in the session. The recent strength came amid comments by Japanese FinMin Katayama, in which she pushed for pension funds to increase investment in domestic financial assets "to ensure the Japanese people can directly benefit from Japan’s growth."
Antipodeans are firmer, with the Kiwi continuing the surge. The RBNZ rate hike was the origin of the recent strength, as markets nearly fully price 2 rate hikes by year-end.

What our latest note said

US Market Open, 21 Oct, 10:29 UTC · what it led with

Pakistan Army Chief Munir brought the "final warning" from the United States to Iranian officials, which called on Iran to submit to the US demands for concessions on the nuclear issue before taking any other steps.

The UK government has approved the Jackdaw North Sea gas field.

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Fed’s Waller (voter) says more rate hikes are likely needed to tame inflation, but there is flexibility over the pace and hikes do not need to be consecutive.

DXY+0.1%

Japan's GPIF didn't discuss allocation at its September meeting, Bloomberg reports.

USD/JPY+0.1%

Japanese FX Official Mimura says they are closely watching to see if markets take the clear message they are giving at face value. Not satisfied with or reassured by recent JPY action.

USD/JPY−0.5%

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[MARKET ANALYSIS] JPY strengthens as Katayama vows for further domestic investment by pension funds

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