Market Rumours

1-month ATM USD/JPY implied volatilities rise to 11.30%/12.00% vs 10.95%/11.65% in NY yesterday as USD/JPY maintains weaker bias, though moves limited in Asia morning; one player eyed selling 1-month USD/JPY ATM straddle at 11.65%. "Looking at a 1- to 2-week period, volatilities have been up and down with 11.5% as a mid-point because the dollar/yen hasn't formed a clear trend, and the pair now isn't playing the leading role in the forex market. But volatilities may gradually ease to below 11% if the dollar rises above the Y90 mark," says Japan bank dealer. Spot now at 88.65.

EUR likely to maintain positive bias vs both USD, JPY in Asia trade, says Sumitomo Mitsui Banking Corp.'s head of FX forward trading group Satoshi Okagawa; tips EUR/USD in 1.3580-1.3680 range vs 1.3607 late NY, EUR/JPY in 120.50-121.50 vs 120.75. "Though uncertainty continues to be high over outlook of U.S. regulation laws as well as Greek debt issue, the market has gained some kind of tolerance against such downside risks, considering recent firm moves in U.S. stocks and commodity prices." Eyes USD/JPY in 88.40-89.40 range vs 88.75, but expects no huge moves in the pair as players waiting to see strength of U.S. economic fundamentals from series of data due later in week, including ISM non-manufacturing index due later today (non-manufacturing PMI tipped 51 for February vs 50.5 previous).