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USD/JPY Reverses Off Highs, But Weakness Looks Corrective

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  • In a partial reversal of the recent rally, USD/JPY was sold across Asia-Pac hours, and traded heavy through the European open. Moves concurred with rates markets fading somewhat after the sharp run higher in US yields since the beginning of the week. The US10y yield faded around 5bps off highs, favouring USD/JPY selling and adding to the downward momentum. That said, the pair remains within range of the Y157.00 handle and support should be found into 156.50.
  • Antipodean currencies are trading poorly, with AUD and NZD softer to provide a generally poor risk backdrop to G10 currency markets, although more stable equity markets should prevent any protracted fallout.
  • Outside of G10 markets, much market focus is on the ZAR as the Presidential election results begin to roll in and show the ANC with a poorer showing than expected, exposing the party to being forced into a market-unfriendly coalition. ZAR is lower by close to 2% against the USD, trading levels last seen in early May.
  • Weekly jobless claims data, advanced trade balance stats and the pending home sales release for April are set to cross later today. The speaker slate could be of more consequence, with Fed's Williams & Logan and ECB's Makhlouf all due to make appearances.
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  • In a partial reversal of the recent rally, USD/JPY was sold across Asia-Pac hours, and traded heavy through the European open. Moves concurred with rates markets fading somewhat after the sharp run higher in US yields since the beginning of the week. The US10y yield faded around 5bps off highs, favouring USD/JPY selling and adding to the downward momentum. That said, the pair remains within range of the Y157.00 handle and support should be found into 156.50.
  • Antipodean currencies are trading poorly, with AUD and NZD softer to provide a generally poor risk backdrop to G10 currency markets, although more stable equity markets should prevent any protracted fallout.
  • Outside of G10 markets, much market focus is on the ZAR as the Presidential election results begin to roll in and show the ANC with a poorer showing than expected, exposing the party to being forced into a market-unfriendly coalition. ZAR is lower by close to 2% against the USD, trading levels last seen in early May.
  • Weekly jobless claims data, advanced trade balance stats and the pending home sales release for April are set to cross later today. The speaker slate could be of more consequence, with Fed's Williams & Logan and ECB's Makhlouf all due to make appearances.