Yen Outperforms On US Yield Pullback

Yen was the second-best performer in the G10 space for Monday's session, gaining 0.64% (only behind NOK). USD/JPY hit a high of 143.00 late in the Asia Pac session on Monday before spending the rest of the session mostly retracing. Weakness was particularly prominent in NY trade, the pair dipping over 100pips to make fresh lows sub 141.50. The pair last tracked in the 141.30/40 region.

• USD/JPY has fallen sub the 20-day EMA, as well as the 142.24 former bull channel top. This level has been pierced, a clear break would signal scope for a deeper correction and open 140.30, the 50-day EMA. Longer-term, the primary trend direction remains up from a technical standpoint.
• Yen's gain was in line with a pull back in US yields, amid optimism of waning pressures for used car prices ahead of the CPI print. The 10yr US government bond yield is back sub 4.00%.
• Correlations have softened though between USD/JPY and US-JP 10yr swap spread moves. For the past two weeks, in levels terms, we are -33%, while in the past month +51%. This down from recent highs closer to 90%.
• Today on the data front we have June money stock figures, followed by June preliminary machine tool orders.