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USD/JPY Touches 132, Focus On Official Rhetoric

JPY

To recap, USD/JPY broke higher post the Asia close. The pair surged towards 132, fresh highs for this year and levels last seen in April 2002. We are tracking close to 131.90 currently.

  • Yen weakness continues to move in sync with the UST move, see the chart below. The 5yr and 10yr surged above 3.00%. Real US yields were also higher, with the 10yr back to +28bps, up from the recent low of +11bps on 27 May.
  • Equities pushed higher, providing no joy for yen from a risk-sentiment stand-point. Only CHF has fallen more against the USD since the start of the week. EUR/JPY is above 141.00 now, AUD/JPY close to 95.00.
  • The focus today will be on official rhetoric around the currency. There is likely to comments around monitoring markets and undesirable moves etc, but this is unlikely to shift market sentiment a great deal. The BoJ backdrop remains dovish compared to the Fed.
  • The data calendar has household spending and earnings data. Also out are the leading and coincident indices.

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