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FOREX: USD/JPY Firms, Steady Trends Elsewhere, Implied Vols Surging At 1wk Tenor

FOREX
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The USD BBDXY index sits higher in latest dealings, last near 1259.75, largely thanks to a weaker yen trend as the Friday Asia Pac session has unfolded. 

  • USD/JPY was softer earlier, perhaps reflecting carry over from Thursday's session, but was supported sub 152.00. The pair last tracked 152.50, off around 0.30% in yen terms, and around session highs.
  • Cross asset sentiment, particularly from an equity market standpoint may be weighing on yen against crosses. Hong Kong and China equities are a clear standout in terms of posting solid gains. This followed the stronger than expected Caixin Manufacturing PMI, which rose back above 50.0.
  • US equity futures are also holding in positive territory, Amazon rose in late Thursday US trade, post earnings, although Apple tracked lower.
  • AUD/USD and NZD/USD are closed to unchanged against the USD, the A$ last near 0.6580, NZD, 0.5980. This leaves both currencies outperforming yen modestly. Neither FX reacted much at the time of the PMI beat in China
  • We had a number of Australian data releases, second tier in nature, which didn't shift A$ sentiment. The household spending gauge was softer though.
  • US yields have largely tracked sideways. Oil prices spiked amid fears Iran may strike Israel via proxies (such as Iraq). Brent was last above $74/bbl.
  • 1 week implied vols are very elevated across the G10, with USD/JPY the highest at +18%. NZD/USD is at 15.75%, AUD is next 15.7%, as next week's US election comes into focus.
  • Looking ahead, Swiss CPI cross Friday before the US jobs data. Nonfarm payrolls growth is expected to slow materially to circa 100k in October after a booming 254k in September, with significant disruption from strikes and potential hurricane fallout.
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The USD BBDXY index sits higher in latest dealings, last near 1259.75, largely thanks to a weaker yen trend as the Friday Asia Pac session has unfolded. 

  • USD/JPY was softer earlier, perhaps reflecting carry over from Thursday's session, but was supported sub 152.00. The pair last tracked 152.50, off around 0.30% in yen terms, and around session highs.
  • Cross asset sentiment, particularly from an equity market standpoint may be weighing on yen against crosses. Hong Kong and China equities are a clear standout in terms of posting solid gains. This followed the stronger than expected Caixin Manufacturing PMI, which rose back above 50.0.
  • US equity futures are also holding in positive territory, Amazon rose in late Thursday US trade, post earnings, although Apple tracked lower.
  • AUD/USD and NZD/USD are closed to unchanged against the USD, the A$ last near 0.6580, NZD, 0.5980. This leaves both currencies outperforming yen modestly. Neither FX reacted much at the time of the PMI beat in China
  • We had a number of Australian data releases, second tier in nature, which didn't shift A$ sentiment. The household spending gauge was softer though.
  • US yields have largely tracked sideways. Oil prices spiked amid fears Iran may strike Israel via proxies (such as Iraq). Brent was last above $74/bbl.
  • 1 week implied vols are very elevated across the G10, with USD/JPY the highest at +18%. NZD/USD is at 15.75%, AUD is next 15.7%, as next week's US election comes into focus.
  • Looking ahead, Swiss CPI cross Friday before the US jobs data. Nonfarm payrolls growth is expected to slow materially to circa 100k in October after a booming 254k in September, with significant disruption from strikes and potential hurricane fallout.