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Underperforms Broader USD Sell-Off On Yield Spike

JPY

USD/JPY is little changed versus levels that prevailed this time yesterday. We currently track at 136.15/20. Post the Asia close we got to the 135.25/30 region, fresh lows for the week, amid a broad pull back in USD sentiment. We rebounded though as the ISM prices paid component comfortably beat market expectations, which sent US yields higher.

  • The US-JP 10yr swap spread is now back to late Nov 2022 levels, sitting at +291bps. USD/JPY looks too low to these trends, but the pull back in USD indices in the past 24-28 hours has been an offset from a yen standpoint.
  • JPY underperformance within the G10 space was clearly evident though, particularly against NZD and EUR.
  • Today on the data front we have capital spending and Q4 company profits data. Monetary base figures are also due, along with the weekly foreign investment flow figures. Also note that BoJ Board member Takata will speak at 10:30am local time.
  • Tomorrow's Feb Tokyo CPI prints are also coming into focus. Government subsidies for the energy sector are expected to see a sharp slowdown in headline measures.
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