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Yen Falters On Risk Rebound, But Weaker U.S. Tsy Yields Make USD/JPY Heavy

JPY

U.S. Tsys went offered on Wednesday as risk assets got some reprieve, with narrower yield spreads with Japan applying pressure to USD/JPY. The rate lost some altitude, but the yen was the second-worst G10 performer as demand for safe havens evaporated.

  • Risk sentiment was supported by the BoE's announcement of unlimited purchases of long-dated gilts to stabilise the UK bond market after tremors caused by fiscal plans unveiled by the government.
  • U.S./Japan 10-year yield spread shrank 20.8bp, returning below 350bp. The gap on 2-year yields was 15.3bp narrower come the end of the day.
  • Ex-BoJ Dep Gov Nakaso said that Abenomics put too much burden on monetary policy, while putting too little emphasis on pursuing pro-growth structural reforms. He is seen as one of the top two candidates to replace Gov Kuroda next year.
  • Spot USD/JPY last trades at Y144.24, up 8 pips on the day, with topside technical focus still on Sep 22 high/2.764 proj of the Aug 2 - 8 - 11 price swing at Y145.90/146.03. Bears look for losses past Sep 22 low of Y140.36.
  • There is little of note on the Japanese data docket today, with a slew of activity indicators coming up Friday.
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U.S. Tsys went offered on Wednesday as risk assets got some reprieve, with narrower yield spreads with Japan applying pressure to USD/JPY. The rate lost some altitude, but the yen was the second-worst G10 performer as demand for safe havens evaporated.

  • Risk sentiment was supported by the BoE's announcement of unlimited purchases of long-dated gilts to stabilise the UK bond market after tremors caused by fiscal plans unveiled by the government.
  • U.S./Japan 10-year yield spread shrank 20.8bp, returning below 350bp. The gap on 2-year yields was 15.3bp narrower come the end of the day.
  • Ex-BoJ Dep Gov Nakaso said that Abenomics put too much burden on monetary policy, while putting too little emphasis on pursuing pro-growth structural reforms. He is seen as one of the top two candidates to replace Gov Kuroda next year.
  • Spot USD/JPY last trades at Y144.24, up 8 pips on the day, with topside technical focus still on Sep 22 high/2.764 proj of the Aug 2 - 8 - 11 price swing at Y145.90/146.03. Bears look for losses past Sep 22 low of Y140.36.
  • There is little of note on the Japanese data docket today, with a slew of activity indicators coming up Friday.