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FOREX: Yen Underperforms AUD and NZD Amid Yield Surge

FOREX
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The USD BBDXY index sits slightly lower in the first part of Tuesday dealings, last near 1256.6, but there has been greater focus on AUD and NZD outperformance, particularly against the yen.

  • USD/JPY has hit fresh multi month highs, getting to 151.10, but sits slightly lower now, last near 150.90. Earlier comments crossed from the Deputy Cabinet Secretary that he would not comment on current FX rate (per BBG).
  • We also heard from BoJ official Kato that the central bank is not targeting a specific FX level, but is watching upside risks from import prices closely. Kato also stated the central bank is watching US economy/election risks as well (per Jiji/RTRS).
  • The turnaround in US yields, which were softer in the first part of trade, to tick higher (now up a little over 1bps at the back end), helped push USD/JPY higher.
  • AUD and NZD both sit around 0.40% higher. AUD/USD last near 0.6680/85, while NZD is near 0.6055.
  • We have seen a very sharp sell off in Aussie bonds, with yields up over 14bps for the 10yr. This looks globally driven on US/EU spill over, but has nevertheless likely helped the AUD today.
  • China/HK equities have also tracked higher to the break, another marginal positive. US equity futures hold lower at this stage.
  • Looking ahead, we have US data in terms of the Richmond Fed survey, while the BoE's Bailey will also speak. We also hear from the ECB's Lagarde. 
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The USD BBDXY index sits slightly lower in the first part of Tuesday dealings, last near 1256.6, but there has been greater focus on AUD and NZD outperformance, particularly against the yen.

  • USD/JPY has hit fresh multi month highs, getting to 151.10, but sits slightly lower now, last near 150.90. Earlier comments crossed from the Deputy Cabinet Secretary that he would not comment on current FX rate (per BBG).
  • We also heard from BoJ official Kato that the central bank is not targeting a specific FX level, but is watching upside risks from import prices closely. Kato also stated the central bank is watching US economy/election risks as well (per Jiji/RTRS).
  • The turnaround in US yields, which were softer in the first part of trade, to tick higher (now up a little over 1bps at the back end), helped push USD/JPY higher.
  • AUD and NZD both sit around 0.40% higher. AUD/USD last near 0.6680/85, while NZD is near 0.6055.
  • We have seen a very sharp sell off in Aussie bonds, with yields up over 14bps for the 10yr. This looks globally driven on US/EU spill over, but has nevertheless likely helped the AUD today.
  • China/HK equities have also tracked higher to the break, another marginal positive. US equity futures hold lower at this stage.
  • Looking ahead, we have US data in terms of the Richmond Fed survey, while the BoE's Bailey will also speak. We also hear from the ECB's Lagarde.