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Japanese Yen Extends Recovery Amid Weak US JOLTS Data

FOREX
  • The dovish move in Fed pricing saw a modest extension on the back of the softer-than-expected JOLTS job opening print. Upward revisions to the quits rate data helped to temporarily counter the move, however, US yields have maintained their lower trajectory throughout the session. The narrowing yield differential dynamics have specifically boosted the likes of the JPY and CHF, the clear outperformers on Tuesday.
  • USDJPY trades down 0.85% around 154.80, extending an impressive move from the 157.50 highs just yesterday. The latest pullback appears to be a correction - for now. However, the pair has breached the 20-day EMA and the continuation lower has exposed key support at 154.65, the 50-day EMA, and 153.81, a trendline drawn from the Dec 28 low.
  • For EURJPY, the cross sits 1.05% in the red and is heading towards key trendline support drawn from the Dec 7 ‘23 low, at 167.05. A clear breach of this line would highlight a potential reversal. Concurrently, the 50-day EMA intersects at 167.14.
  • The Swiss franc shrugged off a marginally softer-than-expected core CPI print to end significantly higher on the day. SNB’s Jordan made hawkish remarks last week and the dip lower in yields has helped exacerbate the correction lower for USDCHF, an impressive 2.85% below last week’s highs.
  • Sharp downward pressure on crude futures has added headwinds to the Canadian dollar, with WTI extending the week’s decline to around 5.5%. Strong support around the 1.3600 handle keeps a bull trend intact for USDCAD ahead of tomorrow’s BOC decision, where the central bank is expected to initiate monetary easing.
  • With the ECB also taking place this week, we recently noted EURCAD had broken above a cluster of highs around 1.4780. Exponential moving averages are also in a bull mode position and the cross printed as high as 1.4895, a fresh 6-month high. This closely respects the downtrend line from the July 2020 highs.
  • Australian GDP crosses first on Wednesday, before US ADP, the BOC and ISM Services from the US. The ECB decision on Thursday and NFP Friday remain key event risks for the remainder of the week.
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