Yen Stays On Back Foot, Kiwi Trims Gains As NZ Inflation Expectations Cool

Regional reaction to the most recent U.S. nonfarm payroll report released after Asia hours last Friday inspired some fresh demand for USD/JPY but the pair struggled to make much headway beyond the prior trading day's high. It topped out at Y135.58 and trimmed gains into the Tokyo fix as U.S. Tsy yields slipped into negative territory. The yen continues to underperform its G10 peers at the margin, mostly due to the absence of other notable catalysts.

• USD/JPY risk reversal crept higher, printing new multi-week highs across the curve, indicating stronger bullish sentiment among options traders.
• The BBDXY index retraced its initial uptick but managed to consolidate its post-NFP gains. The expectation-busting jobs report fanned hawkish Fed expectations.
• Antipodean currencies garnered some mild strength, albeit the kiwi dollar pared advance upon the release of the RBNZ's Q3 Survey of Expectations, which showed the first decline in 2-year out inflation expectations since mid-2020.
• The global economic docket is particularly thin today.