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USDJPY has retreated from its 200-DMA....>

DOLLAR-YEN
DOLLAR-YEN: USDJPY has retreated from its 200-DMA (110.21), aided by AUDJPY
sales, to deal at ~110.00. Both the USDJPY 1- & 3-Month 25 delta risk reversals
have tracked spot away from the lows posted last week, at the height of the
worry surrounding the Italian political situation, which added to the risk off
flows surrounding the ongoing trade war issues. In a POV posted 2 weeks ago we
highlighted that USDJPY's 1-Month and 3-Month 25 delta risk reversals had posted
tops around the Jan highs which added further weight to the cross' move lower,
as the measures turned more & more -ve. The risk reversals are still -ve, but
are back to more "normal" levels. When this is coupled with the idea that Italy
avoided the worst case scenario re: its cabinet, the move would suggest that
USDJPY may struggle to retest last weeks lows for the time being, especially
with US 10-Year Tsy yields back near 3.00%. The risks to this idea include a
further deterioration in the global trade arena, an escalation of US-North Korea
tensions & fresh questions surrounding the Italian political situation.
- Nearby options expiries of note for today's 10AM NY cut Y109.00($1.53bn),
Y109.70-75($750mn), Y110.00($502mn), Y110.50($361mn), Y111.00-10($1.1bn)
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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