Risk-off sentiment has seen USDJPY extend.......>

YEN: Risk-off sentiment has seen USDJPY extend yesterday's decline but the 112

level is holding for now. A break below here would strengthen the bearish case,

opening the up trendline & 100-dma support at 111.26 and raising the prospect of

a bearish reversal pattern. 

- Yesterday's drop in USDJPY was larger than would be expected based solely on

US real yield movements, yet yen crosses held up relatively well considering the

crash in US stocks. The key question is whether further equity declines will

support the dollar and the yen, causing further panic selling in yen crosses. 

- The drop below the 50-dma in EURJPY is a negative sign in this regard, and the

78.69 level in AUDJPY is likely to be key, but we are still ~1% clear of this

level for now.