Yen Outperforms On Core Yield Pullback

Yen ended Wednesday's session the second best performer in the G10 space (behind AUD), with the currency rallying 0.72%, amid a broad pull back in core yields. Post the Asia close USD/JPY tracked mostly lower, getting close to 144.50 in NY trade before some support emerged. We ended NY trade near 144.85, which is where we currently track.

• Core yields sank on disappointing PMI data, first in the EU, led by the services side, then in the US. EU and UK short end yields fell more so than in the US (German 2yr down -12.6bps, UK 2yr -17.1bps, while US 2yr fell -7.9bps), which helped yen outperform both GBP and EUR.
• EUR/JPY got sub 157.00 before stabilizing, last near 157.40, while GBP/JPY found some support under 183.50 (last around 184.30).
• Despite the sharp pull back in USD/JPY, the technical picture remains a supportive one. Initial firm support lies at the 20-day EMA, which comes in at 144.17.
• Higher equities in the US, buoyed by a strong revenue outlook from Nvidia in late trade, left yen outperformance against higher beta plays as marginal, while AUD/JPY tracks firmer near 93.80/85.
• On the data front, weekly investment flow figures are out today.