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JPY Outperforms On Yield Pullback/Equity Weakness, Local Markets Closed

JPY

Yen was range bound post the Asia close on Tuesday until US data hit. We fell from around 137.50 to 136.30 as US yields slid on disappointing JOLTS data. The pair stabilized somewhat from there and we currently track around 136.50/55. This left the yen 0.7% stronger for Tuesday's session, the best performer in the G10 space.

  • Note onshore markets in Japan are closed for the next 3 sessions (May 3-5th) for a variety of holidays. This will impact yen liquidity against the USD and on crosses.
  • This will leave yen sentiment even more driven by offshore factors. Outside of the pull back in US yields (2yr back to 3.95/4.00% form 4.15%). US equities also faltered, with the VIX pushing back to 17.8%.
  • AUD/JPY moved off post RBA highs, with the equity risk aversion a likely factor. We moved from 92.40/45, back to ~91.00, which is where we currently track. This was more than a 1.5% move peak to trough move lower.
  • 1 month USD/JPY vol edged up from recent lows, last around 10.25%, the 1 month risk reversal is down slightly to -0.94 from 0.80 prior to the US data prints.
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