USD/JPY Back To Early July Highs, Onshore Markets Closed Today

Yen was the second worst performer in the G10 space for Thursday's session. The pair staged an impressive rally from 143.30 to fresh highs around 144.80/85 late in NY session. The low was marked around the time of the US CPI print. This left JPY 0.71% weaker on Thursday, the fourth straight session of losses. USD/JPY currently tracks near 144.70.

• Bulls remain in the driver's seat from a technical FX standpoint. Resistance at 144.20, the Jul 7 high, gave way, opening key resistance and the bull trigger at 145.07, the Jun 30 high. Moving average studies are in a bull mode condition, highlighting an uptrend. A break of 145.07 would confirm a resumption of the trend. On the downside, initial support to watch lies at 141.75, the 20-day EMA.
• US yields rose across the curve despite the slightly weaker than expected US CPI outcome. Comments from San Francisco Fed President Daly that there is more work to be done to balance the economy and that she is undecided on whether to support another rate hike next month, likely added to yield pressure.
• US-JP 10yr swap spreads could sustain moves back above +300bps, although Japan markets are closed today (for the Mountain Day holiday), so we won't get the local yield/swap reaction to US moves from Thursday.