Yen Rebounds On US Yield Slump, But Weakens Against Higher Beta FX

USD/JPY made fresh 2023 highs of 147.37 post the Asia close on Tuesday before pulling back sharply. We pulled back to 145.66 late in NY late, before closing near 145.90 and we track just below this level in early trade today. Yen gained 0.45% for Tuesday's session, amid broad USD losses, although yen was towards the bottom end in terms of G10 performance, with higher beta FX outperforming.

• Tuesday's pullback doesn't change the technical set up for the pair, which remains bullish. We got close to 147.49, a Fibonacci projection and the next objective. A break would open 148.40, the Nov 4 2022 high. Support to watch lies at 144.77, the 20-day EMA.
• Yen benefited from a sharp pull back in US yields, led by the front end (2yr back sub 4.90%, -11bps, 10yr back to 4.12%, -8bps), which followed weaker JOLTS job opening data in the US and a downside miss in consumer confidence.
• A bullish US equity tone, aided by the yield pullback, crimped yen performance against higher beta crosses. AUD/JPY is above 94.50 in early trade this morning.
• Locally, Toyota will gradually resume operations at all of its 14 factories today after a system failure halted operations yesterday. On the data front we have August consumer confidence out, while BoJ's Tamura speaks in Hokkaido at 10:30 local time (02:30 BST).