FOREX: USD/JPY Through August 5 Lows As Harris Deemed Winner Of Debate

The reflation theme has taken a hit today, with US Vice President Harris deemed the winner of the Presidential debate versus former President Trump. Election odds have firmed in favor of Harris and moved lower for Trump. CNN also noted that 63% of voters (surveyed after the debate) believed Harris won the debate. Safe haven FX has outperformed, with yen rallying 1%, with USD/JPY breaking down through key support at 141.70. 

• USD/JPY is tracking close to 141.00 in latest dealings, nearly 1.0% firmer for the session in yen terms. Session lows today rest at 140.91. Having broken down through 141.70, the Aug 5 low, focus will be on 140.82, the Jan 2 low. Note 140.25 is the Dec 28 low from last year and key support. US-JP yield differentials are lower at the front, the spread at +319bps, levels last seen in August last year.
• With Harris having appeared to have won the US Presidential debate we are seeing some modest downside pressure on US yields. Earlier comments from BoJ official Nakagawa also lent hawkish, so this is likely providing some positive yen impetus as well.
• US equity futures are lower, with Eminis down 0.50%, while Nasdaq futures are off 0.65%, with similar drivers at play. USD/CHF is off 0.45%, last near 0.8430.
• AUD/USD is relatively unchanged, the pair last near 0.6650. Comments from the RBA's Hunter didn't impact sentiment. NZD/USD is down slightly, last near 0.6140, off 0.15%.
• Later the focus will be on US August CPI, which is expected to show headline easing to 2.5% y/y with core stable at 3.2%. There are also US August real earnings and UK July trade/IP/GDP. The ECB’s McCaul and Buch speak too.