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JPY on Top as Haven Trade Persists

FOREX
  • JPY is comfortably the outperformer early Monday, with equities sliding on the open and providing a boost to haven currencies across G10. This extends the USD/JPY pullback off the early March highs, with horizontal support at 129.81 the next downside target for bears. Last week's break and close below the 50-dma was a bearish signal, making the YTD lows printed in January at 127.23 a more realistic prospect over the medium-term.
  • European bank stocks traded heavy from the off, with the UBS - Credit Suisse merger agreement being poorly received by markets due to the heavy dilution of AT1 bond holders and the much lower-than-market price being paid for the Credit Suisse assets. Heavy equity trade translated to weakness in the single currency on the opening bell, however much of the down-move has been reversed headed through the NY crossover.
  • Growth and risk proxy FX are at the bottom-end of the G10 pile, putting NZD, AUD lower against most others. AUD/JPY weakness as put the cross at fresh 2023 lows, with 87.03 a key level going forward. Weakness through here opens levels not seen since H1 2022.
  • Datapoints are few and far between Monday, with the deluge of CB risk to come later this week. The Fed, BoE, SNB, Norges Bank decisions start on Wednesday, with a number of EM banks also on the docket (namely Brazil, Philippines, Turkey and Taiwan). ECB's Lagarde and Centeno are set to be speaking later today, as the ECB President appears in front of European Parliament.

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