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FOREX: JPY Trade-Weighted Index Surges Further, 6.5% Above Lows

FOREX
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  • The JPY spot trade-weighted index hit a new recovery high ahead of today's European open, extending the rally off pre-intervention lows to near 6.5% at the daily high. The JPY rally puts the currency top of the G10 table again this morning, putting USD/JPY at new lows and prompting a print below Y100 for AUD/JPY. 
  • The aggressive short-covering rally continues (we wrote yesterday that deeply entrenched short positioning means this tailwind could persist in the short-term), allowing markets to shrug technical and momentum-signals that flag the JPY rally should run out of steam - the 14d RSI flags JPY as overbought against effectively every other currency in G10 at present. 
  • Growth and risk-proxy currencies are hardest hit - keeping AUD, NZD as the key underperformers. Softer equities and commodities prices are once again weighing, with yesterday's late run higher in the US 10y yield adding an extra element to the risk-off dynamic.
  • German IFO data, US weekly claims & Advance GDP and appearances from ECB's Nagel (1200BST) and Lagarde (1600BST) top the schedule. 
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  • The JPY spot trade-weighted index hit a new recovery high ahead of today's European open, extending the rally off pre-intervention lows to near 6.5% at the daily high. The JPY rally puts the currency top of the G10 table again this morning, putting USD/JPY at new lows and prompting a print below Y100 for AUD/JPY. 
  • The aggressive short-covering rally continues (we wrote yesterday that deeply entrenched short positioning means this tailwind could persist in the short-term), allowing markets to shrug technical and momentum-signals that flag the JPY rally should run out of steam - the 14d RSI flags JPY as overbought against effectively every other currency in G10 at present. 
  • Growth and risk-proxy currencies are hardest hit - keeping AUD, NZD as the key underperformers. Softer equities and commodities prices are once again weighing, with yesterday's late run higher in the US 10y yield adding an extra element to the risk-off dynamic.
  • German IFO data, US weekly claims & Advance GDP and appearances from ECB's Nagel (1200BST) and Lagarde (1600BST) top the schedule.