Extending Losses

USD/JPY extends gains after as trading resumes after the pair's best week since Mar 2020, which saw it surge to its strongest levels in three years. The rate changes hands just shy of a fresh cycle peak (Y114.46) printed last Friday, last +10 pips at Y114.32.

• With USD/JPY operating at elevated levels, bulls look for a clearance of the upper 2.0% 10-DMA envelope at Y115.17. Bears keep an eye on Oct 12 low of Y113.00, followed by Sep 30 high of Y112.08, a recent breakout level.
• The yen has been comfortably the worst G10 performer this year, cementing this status during last week's rout.
• Mild headwinds for the yen this morning may be stemming from a strong start to the U.S. earnings season as well as weekend comments from PBOC Gov Yi, who played down risks from the Evergrande crisis.
• On the news front, PM Kishida's trip to the controversial Yasukuni Shrine drew the ire of China and South Korea just weeks after he took office. Elsewhere, the latest opinion polls showed that the LDP maintains lead over rival parties, but a large proportion of voters remain undecided.
• Focus moves to trade balance (Wednesday) as well as national CPI & flash Jibun Bank PMIs (Friday).