USD/JPY Above 154.00, As US Yield Rebound Aided By Retail Sales Beat

USD/JPY was mostly on the front foot post the Asia close on Monday. The pair got to 154.45, fresh cycle highs, before easing. Yen was the worst performer in the G10 space for Monday's session, losing close to 0.70% (with NZD next worst, off 0.66%). Broad USD gains were evident, amid higher US yields, BBDXY +0.18%, with only CHF rising for the session. USD/JPY tracks around 154.20/25 in early Tuesday trade.

• Higher-than-expected retail sales data in the US prompted further upward pressure on US yields to start the week. US Tsy benchmarks were +2 to +9bps firmer across the curve, led by the back end.
• This is keeping US-JP yield differentials close to recent highs, with the 10yr spread back towards mid Nov levels from last year (last around +373bps, although JGBs may see some pressure today in response to US moves on Monday).
• Japan’s top currency official said that the MOF is in frequent contact with FX officials abroad, while CFTC data shows the JPY net short position growing to 50% of open interest – leaving markets outright short by 162,151 contracts, the largest net short since the onset of the Global Financial Crisis in 2007.
• 155.00, round figure resistance, could be eyed on the topside as the bull cycle extends in the pair. Initial firm support lies at 151.58, the 20-day EMA.
• In the option expiry space, note the following for NY cut later: Y153.00($510mln). The local data calendar is empty today.