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USD/JPY Pullback Opens Further Gap With Cycle High

FOREX
  • Amid unrest in the Middle-east, a rallying oil price and the partial absence of US market participants, a risk-off feel dominated currency markets into the Monday close. USD/JPY fell comfortably back below the Y149.00 handle, opening a more sizeable gap with the recent cycle high at 150.16.
  • Oil-tied currencies saw a solid tailwind on the back of the rallying Brent and WTI crude price. Resultingly, NOK remained the G10 outperformer, while the uncertain geopolitical backdrop dragged SEK, which traded along with the EUR as the session's poorest performer. After finding support at parity last week, NOKSEK eyes the 200-day EMA at 1.0200 as the next key level. Above this, the 50-day EMA at 1.0247 is the bull trigger.
  • The EUR traded poorly, falling against all others as a core EGB rally took. Short-term momentum across the German front-end prompted the downtrend in Schatz and Bobl futures to be reversed, prompting a ~10bps move lower in the German front-end. Resultingly, EUR lagged all others, helping EUR/GBP finish lower for a sixth consecutive session.
  • Focus Tuesday turns to Australian consumer confidence, Italian industrial production and final US wholesale inventories data for August. The NY Fed also release their 1yr inflation expectations survey later in the session. Central bank speakers include Fed's Perli, Bostic, Waller, Kashkari & Daly as well as ECB's Villeroy.

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