JPY Defies Buoyant Equities

Newsflow and datapoints were few and far between Monday, leaving most currencies searching for direction. Nonetheless, JPY outperformed, pressuring USD/JPY through first support before the decline stalled ahead of 105.96 Fib support. AUD rose alongside JPY, underpinned by the continued resilience of equities, but the rally in AUD/USD stopped short of testing the recovery high and bull trigger at 0.7243.

At the other end of the scale, the greenback traded softer, pressuring the USD index close to the multi-year lows printed in early August at 92.521. The moves follow the disclosure of the net position of leveraged funds in the most recent CFTC CoT report, which have switched to net short for the first time since 2018.

Equities were generally positive, with European markets finishing in minor positive territory (although peripheral Italian and Spanish markets finished lower) while the S&P 500 held the bulk of recent gains, but failed to print a new recovery high.

US housing starts and building permits data are the sole releases Tuesday. RBA minutes are due as well as an appearance from ECB's de Guindos.