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JGB TECHS

(M2) Correction Extends

US STOCKS

Late Session Rebound

AUSSIE 10-YEAR TECHS

(M2) Corrective Cycle Remains In Play

AUSSIE 3-YEAR TECHS

(M2) Gains Still Considered Corrective

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JPY

A weaker greenback saw USD/JPY fall on Monday, the pair fell to lows of 109.35 before recovering into the US close, it had been as high as 110.20 earlier in the session on Monday. Last trades at 109.51, down 7 pips.

  • Data just released showed Q1 capital spending fell more than expected at -7.8% Y/Y, consensus -6.8%, capital spending ex-software came in at -9.9% Y/Y against estimates of -7.6%. Companies sales print -3.0% Y/Y, profits rose 26.0% after falling 0.7% in Q4. The decline in capital spending can be attributed to measures imposed to contain the pandemic, which curbed activity and created an uncertain outlook, the most recent state of emergency was extended until mid-June last week. The figures will feed into updated GDP figures due next week.
  • From a technical perspective the USD/JPY outlook remains bullish and the move lower from Friday's high is considered corrective. The break higher last week confirmed a resumption of the recovery that started Apr 23. The pair probed 110.15, a Fibonacci retracement. This turns the focus to this year's high print of 110.97 from Mar 31. A break would confirm a resumption of this year's uptrend. Key short-term support has been defined at 108.56, Low May 25.
  • Data still due in the session includes May final Jibun Bank PMI manufacturing and vehicle sales.

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