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GILT TECHS

(Z1) Double Bottom Reversal

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The yen resumed its slide on Thursday, as improving risk appetite and rising commodity prices applied renewed pressure to the safe-haven currency. USD/JPY recouped the prior day's losses and approached multi-year highs printed earlier this week.

  • JPY sales have continued this morning, with the currency on track to finish the week as the worst G10 performer. It has been the only major currency to underperform the USD this week.
  • USD/JPY last operates at Y113.75, 7 pips higher on the day, after having a brief look above Wednesday's multi-year high. Bulls eye the upper 2.0% 10-DMA envelope at Y114.78 for initial resistance. Bears need a pullback under Sep 30 high of Y112.08, a recent breakout level, to get some reprieve.
  • PM Kishida dissolved the lower house of parliament yesterday, setting the stage for the Oct 31 general election. Voters will cast their ballots after the shortest campaign in Japan's post-war history, which gives the opposition very little time to form a united front at a time when the ruling LDP retains a comfortable lead in opinion polls.
  • The Premier reiterated his pledge to unveil a stimulus package worth "tens of trillion of yen" after the election. He noted that his government will outline plans for post-Covid recovery as soon as today.
  • Focus in Japan turns to trade balance (Wednesday), final machine tool orders (Thursday) as well as national CPI & flash Jibun Bank PMIs (Friday).