USD/JPY shows below Y111.00 on equity.........>

FOREX: USD/JPY shows below Y111.00 on equity weakness

-Despite a somewhat positive start to the European session, US traders chose to

sell risk assets for much of the session, grinding US 10yr Treasury yields back

below the 2.50% mark once more. This helped press USD/JPY (and, to a lesser

extent, EUR/JPY) lower throughout NY hours, briefly showing below Y111.00 (hit

Y110.98). EUR/USD traded well throughout the day touching 2 week highs at

$1.1285, with options markets appearing more buoyant as 1m risk reversals hit

their highest since Mar20.

-GBP was the poorest performer Tuesday despite breaking above $1.31 in early

Europe, as the German government were quick to deny reports that Chancellor

Merkel is open to attaching a five-year time limit on the Northern Irish

backstop. GBP/USD shed close to 100 pips from the highs, turning focus to

tomorrow's emergency EU summit.

-The Wednesday session is a busy one, with the ECB meeting (brought forward by

IMF/World Bank meetings and the timing of Easter) as well as Fed minutes, UK

industrial & manufacturing production and US CPI for March.