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USDJPY Surges Above 154.00 Amid Further Hot US Data

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  • Higher-than-expected retail sales data in the US prompted further upward pressure on US yields to start the week, maintaining an underlying bid for the greenback and further weighing on a struggling Japanese Yen.
  • USDJPY had already rallied in Asia as risk sentiment stabilised amid the ongoing concerns in the middle east. This saw the pair extend its impressive advance to around 153.80, following the prior clean break above 152.00.
  • Aided by the US data, the pair then cleared 154.00 and printed fresh cycle highs at 154.45. Japan’s top currency official said that the MOF is in frequent contact with FX officials abroad, however, the fundamental backdrop and widening yield differentials continue to drive USDJPY higher.
  • Further defying the Japanese authorities’ warnings of intervention against outsized moves in the currency, CFTC data shows the JPY net short position growing to 50% of open interest – leaving markets outright short by 162,151 contracts, the largest net short since the onset of the Global Financial Crisis in 2007.
  • Elsewhere, G10 ranges were more subdued with EURUSD briefly matching Friday’s lows around 1.0622 in the aftermath of the US data release. The moderate pull lower for equities leaves NZD as the underperformer, falling 0.4% against the greenback.
  • The high frequency of UK risk events this week has prompted a solid rally in the front-end of the vol curve, with 1-week vols touching new multi-month highs today. This leaves the one-week breakeven on a GBP/USD straddle at ~100 pips, leaving support at 1.2427 – last week’s GBP/USD low - exposed ahead of 1.2364, seen as firmer support.
  • Chinese activity data will be the highlight of Tuesday’s Asia-Pac session, before focus turns to employment data in the UK. The latter half of the session will have Canada CPI for March.
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  • Higher-than-expected retail sales data in the US prompted further upward pressure on US yields to start the week, maintaining an underlying bid for the greenback and further weighing on a struggling Japanese Yen.
  • USDJPY had already rallied in Asia as risk sentiment stabilised amid the ongoing concerns in the middle east. This saw the pair extend its impressive advance to around 153.80, following the prior clean break above 152.00.
  • Aided by the US data, the pair then cleared 154.00 and printed fresh cycle highs at 154.45. Japan’s top currency official said that the MOF is in frequent contact with FX officials abroad, however, the fundamental backdrop and widening yield differentials continue to drive USDJPY higher.
  • Further defying the Japanese authorities’ warnings of intervention against outsized moves in the currency, CFTC data shows the JPY net short position growing to 50% of open interest – leaving markets outright short by 162,151 contracts, the largest net short since the onset of the Global Financial Crisis in 2007.
  • Elsewhere, G10 ranges were more subdued with EURUSD briefly matching Friday’s lows around 1.0622 in the aftermath of the US data release. The moderate pull lower for equities leaves NZD as the underperformer, falling 0.4% against the greenback.
  • The high frequency of UK risk events this week has prompted a solid rally in the front-end of the vol curve, with 1-week vols touching new multi-month highs today. This leaves the one-week breakeven on a GBP/USD straddle at ~100 pips, leaving support at 1.2427 – last week’s GBP/USD low - exposed ahead of 1.2364, seen as firmer support.
  • Chinese activity data will be the highlight of Tuesday’s Asia-Pac session, before focus turns to employment data in the UK. The latter half of the session will have Canada CPI for March.