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Yen Outperforms On Risk Off Tone


Yen finished Friday's session 0.16% stronger in Friday dealing. We ended near 149.60 in NY trade, but have drifted slightly lower this morning, last near 149.40. Broader USD sentiment was mixed through Friday, although yen outperformed higher beta plays in terms of AUD and NZD. NZD/JPY has pared some of Friday losses in early trade today, post the weekend NZ election outcome (NZD/JPY last near 88.20, Friday lows were closer to 88.00).

  • For USD/JPY technicals, the picture remains unchanged. A clear break of the 150.00 handle would reinforce bullish conditions. The bull trigger is 150.16, the Oct 3 high and a break would open 150.40, a Fibonacci projection. On the downside, clearance of 147.43 would be a bearish development and signal scope for a deeper retracement.
  • Friday delivered a generally risk off tone in global equity markets, which aided the yen at the margins. Key regional equity futures are lower in Asia Pac markets today.
  • Focus remains on the scope for escalation in conflict in the Middle East, with US efforts aimed at containing spill over risks. US yields finished lower on Friday, led by the back end of the curve (10yr to 4.61%).
  • The other focus point remains intervention risks given proximity to 150.00, although the IMF stated it sees no conditions for Japan to intervene in FX markets, see this BBG link for more details.
  • On the data front, we have final August IP on tap today.

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