[cppene]

USDJPY edged higher overnight to a high of 90.71 as risk appetite returned following better than expected ISM manufacturing prints in China, Eurozone, UK and US, coupled with upside surprises in US housing sales and construction spending. This led to a U-turn in yen-crosses as the early Monday morning sell-off led to re-establishment of longs. With Japan out on holiday, Asian trading saw USDJPY edge lower in a tight range of 35pips to the low of 90.15. The low coincides with the move after the RBA rated hikes 25bps as widely expected, but with the Statement opening up the possibility of no December hike, the AUD was sold off, and AUDJPY dragged USDJPY lower. Ahead of FOMC, NFP, and the G20 FinMin meeting, the market is likely to be dominated by risk-aversion, with all eyes on the bond market reaction to the FOMC statement. While many of the short yen positions will have been taken out in Monday’s moves, the market is still short yen. As such, as long as the short-term resistance of 90.71 does not break on the upside, the 4-day lower-daily highs and bearish channel remains intact and traders look for USDJPY to target 88.39-00 level.