MARKET TALK: USD/JPY Breakout Drives Volatilities Higher

The USD/JPY breakout drives volatilities higher, with Tuesday's break to the topside extended in Asia Wednesday, as the pair hit 78.67--the highest since the post-intervention spike at the end of October. Investors have taken fright on this latest move, taking the entire implied volatility curve higher. One-month is up 0.5 of a point and back to the levels at the beginning of the month at 8.25%. Three-month is trading 0.3 of a point firmer from Tuesday at 8.65%. Twelve-month adds 0.1 of a point to trade at 10.9% in Europe Wednesday. With sentiment gauges trading in favor of JPY puts, further gains in USD/JPY will take the curve higher. USD/JPY trades at 78.48.