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FOREX: JPY Rally Shows No Sign of Stopping, AUD Fallout Accelerates

FOREX
  • The JPY surge continues as the aggressive short-covering rally persists, putting the currency higher against all others (again) in G10. The Y152.00 handle is under pressure, and perhaps notably a print below Y151.95 would mark a full 1,000 pip reversal for USD/JPY off the pre-intervention high from early July. This keeps the 200-dma at 151.54 under pressure over the medium-term. A break below would be thje first since December of last year.
  • Global growth and industry concerns are top of mind for markets, after a set of particularly poor earnings results from the Autos sector drove prices lower. Stellantis' >10% sell-off has undermined the Stoxx Autos&Parts Index, which has now fully erased all YTD gains that had hit 20% in mid-April. This risk-off driver has filtered into US yields, which are trading under pressure into the NY crossover and weighing on the greenback.
  • Growth and risk proxy currencies lead declines, with AUD the poorest performer once more. AUD/JPY has broken below not only the key psychological Y100 level, but also the 200-dma at 99.83. The extended momentum-driven decline in the AUD/JPY 14-day RSI shows oversold technical measures are unlikely to reverse near-term trends, despite the signal printing below 20 today for the first time since 2019.
  • US weekly jobless claims numbers and the advance US GDP print for Q2 are the data headlines Thursday, although prelim durable goods orders could also prove key on an out-of-consensus reading. ECB's Nagel and Lagarde are both set to speak, although Nagel's appearance is more likely to be policy-oriented as he appears in Rio at the G20. 
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