USD/JPY Extends Losses, G10 FX Space Struggles For Shared Direction

The dollar index (BBDXY) faltered as U.S. Tsy yields fluctuated and e-mini futures advanced, with participants taking stock of the past week. The index is on track for its first weekly decline this month as the spectre of recession looms large.

• Price action across G10 FX space lacked clear risk directionality, with CHF landing at the bottom of the pile even as its safe haven peer JPY fared well.
• USD/JPY extended its retreat from recent cycle highs and seems poised to register its first weekly loss this month. Continued dip in 1-month risk reversal remained heavy, suggesting that sentiment among option traders was shifting further in favour of calls.
• Japan's core CPI printed perfectly in line with expectations (+2.1% Y/Y). The yen showed little to no reaction to the release.
• The kiwi dollar traded on a firmer footing in the absence of local catalysts and liquidity sapped by a public holiday/market closure in New Zealand.
• German Ifo Survey, UK retail sales & the final reading of U.S. Uni. of Mich. Sentiment take focus from here.
• The central bank speaker slate features Fed's Daly & Bullard, ECB's Centeno, de Cos & de Guindos as well as BoE's Pill & Haskel.