A big month awaits for USDJPY
We could be heading for one hell of a month for USDJPY. Not only have expectations for a Fed hike shot to the moon but we see Japan close out its financial year.
Back in early Feb we already started hearing chatter that this years repatriation moves could be larger than normal, with exporters layering offers from 113.00 to 116.00.
There's further confirmation from trading desks today who note that there's now some large offers from 114.00-115.00, and that there's billions of dollars that needs hedging on the Fed and turned into yen to send home.
The March FOMC on the 15th puts it almost bang in the middle of the time when Japanese firms will be doing this business, so it's going to make trading tricky as dollar buyers go head to head with Japanese sellers.
It could mean that USDJPY stays in a very tight range as those forces battle it out, which will have some people scratching their heads if the dollar doesn't rise too far on a hike or, we could see a very quick reverse on a kneejerk move higher if the Fed hikes, as exporters pile in to do their business after the FOMC.
Usually, the repat flows tend to end around 3 days before the actual year end (31st March), but those last few days can be quite volatile if some firms leave it until the last moment.
We'll try and glean as much info as we can as it all happens but be prepared to see moves that sometimes might not make sense on an day by day basis.
