Yen Outperforms, USD/JPY Risk Reversals Back To Recent Lows

Yen ended Wednesday's session as the top performer within the G10 space. USD/JPY was down 0.30% for the session, leaving us back at 131.30/35 currently. We did get as low as 130.64 in NY trade, on the US ISM services miss, but USD losses were pared into the close. The main factor benefiting the yen was the pull back in core yields, with weaker equities also aiding cross performance.

• The US-JP 10yr swap spread has lost around 20bps over the past 5 trading sessions, now back to the +234bps level. Still, US yields finished Wednesday slightly higher from lows, which also coincided with the USD/JPY bounce.
• From a technical standpoint, the trend direction remains skewed to the downside. Support is seen at 130.64, yesterday's low, while 129.64, the Mar 24 low and bear trigger is still in play on the downside. On the topside the 20-day EMA comes in at 132.68.
• EUR/JPY corrected lower further from recent highs, last near 143.00, with moves above 145/146 providing resistance at this stage.
• On the data front today we have weekly investment flow figures, along with Tokyo office vacancies for March.
• The 1 month USD/JPY risk reversal is back close to recent lows, last just under -2.00. 1 month vols sit above late March lows but still within recent ranges, last near 13%.