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Front-End Pressure Translates to Fresh Pullback Lows For USD/JPY

JPY
  • Renewed pressure on the front-end of the curve across the US, EZ and UK (and the market-implied rate hike pricing) translates to further USD weakness and allows EUR/USD and GBP/USD to trade more steady above lows.
  • USDJPY has printed a new pullback low at 132.49, extending the losses on the day to 250pips and near 550 pips off the post-Powell high next week. Spot rate now sits pinned between two sizeable expiries for today's NY cut: $1.0bln at Y132.00 and $710mln at Y132.50.
  • Spot volatility continues to feed into implied vols, with USD/JPY overnight vols hitting a daily high above 33 points - although someway to go until the pre-BoJ / NFP high of 43 points can be met.

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