Lags Commodity FX, Higher US Yields Keeps USD/JPY Elevated

Yen was the weakest performer in the G10 space through Monday's session, albeit at the margins. The yen lost 0.22% against the USD and we currently track in the 135.05/10 region, slightly down from Monday session highs. The post Asia close saw familiar ranges persist, with offers above 135.20, while moves to 134.65 drew bidding interest.

• Yen was weighed by a generally firmer yield backdrop, with the US 2yr back to a 4% handle, while the 10yr is now just above 3.50%. The Fed loan officer survey showed tightening lending standards in Q1 but appeared to weigh more on equity sentiment than the yield backdrop. The SPX finishing close to flat.
• Commodity indices continued to recover though, with the commodity FX bloc generally outperforming. AUD/JPY got close to 91.90, but now sits slightly lower at 91.55/60, note the 200-day MA comes in just above 92.00.
• On the data front, we have household spending for Mar (0.8% y/y, 1.6% prior), while Mar labor cash earnings are also out (nominal forecast at 1.0% y/y, 0.8% prior, real earnings forecast at -2.4% y/y, prior -2.9%).
• There is hope that the removal of covid restrictions will aid the economic recovery further, particularly in the tourism sector (see this link for more details).
• 1 month implied USD/JPY vols remain benign, last around 10%. The 1 month risk reversal is around mid range for May, last near -1.50.