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Underperforms Amid Core Yield Rebound

JPY

Monday delivered yen underperformance, with the currency falling close to 0.65% against the USD. It was comfortably the worst performer within the G10 space, as higher core yields and better equity market sentiment weighed on safe haven demand. USD/JPY sits back in the 131.50/60 in early trading today. Highs for Monday were around 131.75/80, while early yesterday, lows were supported around the 130.50 region.

  • The US-JP 10yr swap spread moved back to +263bps, we were at +248bps at the end of last week. This helped biased USD/JPY higher, although we remain within recent ranges. A move above 133.17, the 20-day EMA is needed break the bearish backdrop.
  • Higher equities, with on-going focus in terms of banking stocks, also aided yen crosses higher. Dips in EUR/JPY remain supported sub 140, (last around 142.00). Short-term resistance at 143.63 is still evident, with a break needed above this level to re-instate a bullish theme.
  • The local data calendar is quiet today, although outgoing BoJ Governor Kuroda speaks at the FIN/SUM in Tokyo at 1pm local time.
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