Yen Unwinds Recent Outperformance

JPY has reversed the firmer bias from late last week, falling against the rest of the G10 bloc since the start of the week. USD/JPY got close to 135.80 overnight, but has pushed above this level in early trading today (last sitting at 135.75/80).

• Firmer EU/UK yields, +10bps across 2yr and 10yr tenors, aided the yen underperformance theme overnight. AUD/JPY pushed back to 93.30, rebounding above the 50-day MA at 92.50.
• Equity sentiment was mixed, with EU bourses managing a small gain, while US futures stayed in the red, although are opening up at better levels this morning, with the S&P500 and Nasdaq printing modest gains.
• Locally, the ruling party is set to win upcoming upper house elections. Latest opinion polls suggest the Liberal Democratic Party will win 65-80 of the 125 seats contested. The election will be held on July 10th.
• Elsewhere, a former BoJ economist expects the BoJ to upgrade its inflation outlook at the July meeting, but this wasn’t expected to drive a policy shift in the near term.
• Today on the data front, labor cash earnings are out for May, along with the final services and composite PMI readings for June. The services last printed at 54.2, while the composite was at 53.2.