Yen Strength Continues, AUD Can't Sustain Data Induced Bounce

Yen strength has been the main feature in the G10 space today. USD/JPY dipped as far as 143.42, but we now sit back around the 143.60/65 level, around 0.45% stronger in yen terms. A continued mover lower in US yields has aided yen sentiment. The BBDXY is back near 1221.5, slightly down for the session. Moves elsewhere have been muted, with AUD unable to capitalize on a retail sales data beat.

• Yen gains have come despite a benign Tokyo CPI print, with headline inflation continuing to track lower in y/y terms. Core-core inflation is proving stickier though. There is a chunky option expiry at 143.60, which may also be influencing spot.
• US yields opened lower and have stayed that way, the back end of the curve -2-3bps lower. There hasn’t been anything meaningful on the newsflow front other than Fed Bowman’s aftermarket comments, which flagged the potential to begin cutting interest rates at some point to prevent overly tight policy. She did however caution against expectations for cuts in the near term.
• The AUD got to highs of 0.6735 post the +2%m/m Nov retail sales gain, which was above expectations. The data suggest some pay back in Dec though, as the Nov data was aided by Black Friday sales. AUD/USD last back at 0.6715/20. NZD/USD sits back at session lows as well, last near 0.6250.
• Looking ahead, Swiss currency reserves will be published in European hours on Tuesday, alongside German industrial production and European unemployment figures. US and Canadian trade balance data is also scheduled.