USD Slips On Lower Yields, JPY Outperforming

The USD has lost some momentum, with lower US cash Tsy yields hurting sentiment. Yields are off 4-5bps across the curve. This continues trends from the US session, with the 10yr yield off 22bps since Tuesday’s NY close. Gains against the USD haven't been uniform though, with the AUD still struggling for upside traction.

• Yen has been the main beneficiary of lower US yields, with USD/JPY currently close to session lows at 129.20/25 (we touched 128.16 earlier). Focus remains on yesterday's NY low close to 127.60, while the bear trigger in the low 127.20 region waits beyond that.
• Equity sentiment has improved somewhat, although US futures are still in the red. HK/China chares have recovered from earlier lows, now sitting back in positive territory.
• These moves haven't aided the AUD, which is down over 0.5% to the low 0.6900 region following disappointing jobs data. A large (>$2bn) option expiry tomorrow at 0.6900 may also be influencing spot. Despite the move lower in US yields, AU-US yield differentials are generally moving against the AUD.
• NZD/USD has been dragged lower, but remains above 0.6400 (last 0.6425). EUR/USD is a touch higher, tracking above 1.0800 currently.
• Looking ahead, US building permits and housing starts plus jobless claims and the Philly manufacturing survey are published. ECB’s Lagarde is also scheduled to speak.