General Risk Aversion Lingers, USD/JPY Moves Further Past Y150

Modest defensive feel lingered after Bloomberg reported that the White House is considering export controls to limit China's access to quantum computing and AI, another step in a series of measures designed to stifle Beijing's ability to use cutting-edge technology.

• The BBDXY index crept higher and the U.S. dollar topped the G10 pile, with all three e-mini contracts having a look below yesterday's lows amid risk-negative environment. An upswing in U.S. Tsy yields put a fresh bid into the greenback.
• USD/JPY advanced, adding 25 pips through the session, after the psychological Y150 level gave way Thursday. Intervention talk continued to do the rounds, with FinMin Suzuki noting that "right now we're in a firm confrontation with speculators in the market." The yen was resilient against most other currencies amid reduced appetite for risk.
• The BoJ conducted upsized & unscheduled bond-purchase operations in defence of its 10-Year JGB yield target, to little effect. The Bank's flagship YCC framework is put to a test ahead of next week's monetary policy review, which sent USD/JPY 1-week implied volatility soaring past 16% for the first time in a month.
• The Antipodeans went offered, only the NOK fared worse. AUD/NZD crept higher in tandem with Australia/New Zealand 2-year swap spread, with meeting-dated OIS pricing ~80bp worth of rate hikes at the next RBNZ policy review, down from the ~91bp peak from earlier this week.
• Focus turns to UK retail sales, as well as comments from NY Fed Pres Williams and Chicago Fed Pres Evans.