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Yen Keeps Nosediving, Aussie Goes Bid

FOREX
BulletMarketsFixed IncomeForeign Exchange

The yen steals the show in Asia again, extending its historic losing streak. USD/JPY crossed above the Y129.00 and is consolidating above that round figure as implied volatilities keep climbing, with USD/JPY 3-month risk reversal moving to the highest level since 2015.

  • It won't do the yen any favours that Japan's March trade deficit proved considerably deeper than expected. Despite JPY's typically stoical (non)reaction to domestic data, it will lend further arguments to bearish participants.
  • Note that the market is looking at the BoJ's hands as 10-Year JGB yields are flirting with the 0.25% ceiling of their permitted trading band.
  • Yen weakness is accentuated by an upswing in AUD/JPY which completed a bull pennant formation on Tuesday. This bullish structure materialised as the pair punched through the Y95.00 mark amid growing evidence of the RBA being yet another central bank steering away from the BoJ-like dovish monetary stance.
  • The Aussie dollar is the best performer out of G10 currencies, setting the pace for its commodity-tied peers, as crude oil prices tick higher.
  • Focus moves to China's LPR fixing, Canadian CPI data and U.S. existing home sales as well as comments from several Fed & ECB speakers.
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The yen steals the show in Asia again, extending its historic losing streak. USD/JPY crossed above the Y129.00 and is consolidating above that round figure as implied volatilities keep climbing, with USD/JPY 3-month risk reversal moving to the highest level since 2015.

  • It won't do the yen any favours that Japan's March trade deficit proved considerably deeper than expected. Despite JPY's typically stoical (non)reaction to domestic data, it will lend further arguments to bearish participants.
  • Note that the market is looking at the BoJ's hands as 10-Year JGB yields are flirting with the 0.25% ceiling of their permitted trading band.
  • Yen weakness is accentuated by an upswing in AUD/JPY which completed a bull pennant formation on Tuesday. This bullish structure materialised as the pair punched through the Y95.00 mark amid growing evidence of the RBA being yet another central bank steering away from the BoJ-like dovish monetary stance.
  • The Aussie dollar is the best performer out of G10 currencies, setting the pace for its commodity-tied peers, as crude oil prices tick higher.
  • Focus moves to China's LPR fixing, Canadian CPI data and U.S. existing home sales as well as comments from several Fed & ECB speakers.