The USDJPY currency pair has been in the spotlight recently, particularly after Thursday’s overnight volatility. However, despite the break-even point being reached before non-farm payrolls and other key events, gamma repricing has been muted. This is according to a recent report from UBS Securities and Treasury (UBS S&T).

The market seems to be taking longer to reach the upside, but the downward repricing of gamma at current levels (1w 7.4) appears to be a good value opportunity. This is particularly true after the US dollar broke through resistance at 157 and is heading towards the Supreme Court ruling later on Friday. There has been some interest in outright gamma contracts in the 158-158.50 region over the past couple of days, but it has been relatively light. Meanwhile, directional names remain sidelined.

It’s worth noting that while gamma repricing may be muted, the overall market sentiment remains cautious. Investors are still hesitant to take on significant risk due to the uncertain geopolitical environment and concerns about inflation. As a result, the USDJPY currency pair may continue to trade within a narrow range for the time being.

Despite this, there are some potential opportunities for traders in the USDJPY market. For example, if the current muted gamma repricing trend continues, it could lead to increased volatility in the currency pair as we approach key events such as non-farm payrolls and the Supreme Court ruling. Additionally, the ongoing cautious sentiment among investors may lead to a shift towards more defensive positions, which could benefit currencies like the US dollar.

Overall, while the muted gamma repricing response in the USDJPY market may be a surprise to some, it highlights the complex and ever-changing nature of currency markets. As traders, it’s important to stay vigilant and adapt to these changes in order to capitalize on potential opportunities.