### JPY was the worst performer for a....>

DOLLAR-YEN: ### JPY was the worst performer for a second consecutive session on

Wednesday, with USDJPY briefly topping the 200-DMA at 110.21 as Tsys softened &

equities rallied. USDJPY last deals at 110.10. Both the USDJPY 1- & 3-Month 25

delta risk reversals have tracked spot away from the lows that were posted last

week, at the height of the worry surrounding the Italian political situation,

which added to the risk off flows surrounding the ongoing trade war issues.

- In a POV posted 2 weeks ago we highlighted that USDJPY's 1-Month and 3-Month

25 delta risk reversals had posted tops around the January highs which added

further weight to the move lower, as the measures turned more and more negative.

The risk reversals are still negative, but are back to more "normal" levels.

- When this is coupled with the idea that Italy avoided the worst case scenario

re: its cabinet structure, the move would suggest that USDJPY may struggle to

retest last weeks lows for the time being, especially with US 10-Year Tsy yields

back near 3.00%. The risks to this suggestion include a further deterioration in

the global trade arena, an escalation of US-North Korea tensions & fresh

questions surrounding the Italian political situation.