Back To 150.00 On Lower US Yields, Japan Govt Mulls Stating Deflation Period Over

USD/JPY tracks modestly in the first part of Monday Asia Pac dealings, last near 150.00. Friday's post Asia close session saw a sharp slump from 150.70/75 towards 150.00 in US trade, as we saw data outcomes in the US print weaker than expected (consumer and manufacturing setniment). This weighed on US yields, with the 2yr down nearly 9bps for Friday's session, the 10yr off around 7bps.

• This keeps USD/JPY within recent ranges, with earlier YTD highs at 150.89 still intact. The broader technical backdrop remains supportive though. We dipped sub the 20-day EMA on Thursday at 149.66, but couldn't sustain the break. A clear break of this average is required to signal potential for a deeper retracement, potentially towards the 50-day EMA, at 148.28.
• US-JP yield differentials sit comfortably off recent highs, the 10yr spread around +345/+350bps, depending on how Japan yields respond to US moves today. Recent highs were above +360bps.
• Today, locally we have Q4 Capex and company profits data. Also note that we get monetary base figures as well for Feb.
• Over the weekend, Kyodo reported that the Japanese government is discussing whether it will state that the country's deflation period is now over (see this link for more detail).
• Finally, in the option expiry space we have the following for NY cut later: Y149.70-80($537mln), Y149.95-00($665mln), Y150.45-55($626mln), Y150.85-00($742mln)