USD Off A Touch Despite Equity Falls, Yen Crosses Stabilize

The USD has tracked modestly softer through Friday trade, the BBDXY index off a touch, last near 1257.5.

• Early trends were skewed towards risk off, with JPY and CHF rallying against the likes of AUD and NZD. This reflected sharply lower US equity futures and regional market softness, as tech earnings and US growth slowdown fears hit sentiment.
• However, after both AUD/JPY and NZD/JPY made fresh lows we saw some stability emerge. Both crosses are heavily oversold per technicals, but the market may also be mindful of US payrolls later.
• USD/JPY got to lows of 148.88 before rebounding towards 149.80. We last tracked near 149.40/45, closed to unchanged for the session. There were a number of comments from Japan officials, with FinMin Suzuki stating the authorities are most concerned about the weaker yen boosting imported inflation. The country can also not declare victory over deflation yet.
• AUD/USD has ticked higher, last near 0.6515 (earlier lows were at 0.6487). NZD/USD has lagged somewhat last around 0.5950. Market pricing for an August RBNZ cut sits at 64% (25bps easing). The AUD/NZD is up marginally from recent lows, tracking at 1.0940/45.
• Outside of sharp equity falls and weaker US futures, we have had modest softness in US yields.
• In the commodity space, metals are slightly firmer, but still close to recent lows. Oil is up from Thursday lows but still tracking lower for the week. Gold remains supported.
• Looking ahead, the main focus will be the US NFP report. We also have some BoE speak.