Weakness Persists

Tuesday was a day of two halves for USD/JPY, as the rate retreated to a trough of Y113.88 and then bounced off there, wiping out initial losses. Both sides of the pair remained under pressure, as broader risk tone turned positive in response to solid corporate earnings reports released out of the U.S.

• Geopolitical tensions in East Asia continue to simmer, as North Korea fired apparent submarine-launched ballistic missiles (SLBMs) into the East Sea yesterday. PM Kishida said they likely fell outside Japan's EZZ.
• Japan's trade balance will hit the wires shortly, before focus turns to national CPI & flash Jibun PMIs, due Friday.
• As we await the latest trade report, it is worth flagging a BBG piece noting that Japanese stocks with larger international exposure have outperformed domestic peers this month, as a rapid JPY depreciation has been lending a helping hand to local exporters.
• USD/JPY trades flat at Y114.39 at typing. Bulls keep an eye on the upper 2.0% 10-DMA envelope at Y115.77, while bears look for a sell-off past Oct 15 low of Y113.65 towards Oct 12 low of Y113.00.