Yen Surge Continues, As Risk Off Dominates, NZD/JPY Sub 200-day MA

Yen gains have continued to dominate the G10 FX space. USD/JPY tracks near 154.55/60 in latest dealings, close to session lows. We got to 155.99 in early trade, but that saw selling interest emerge in the pair. We are testing June 4 lows (154.55). The next downside target is 153.66, a retracement level. Elsewhere the USD has mostly been stronger, particularly against NZD and AUD, with both falling sharply against JPY. the USD BBDXY index is little changed, last near 1257.2.

• Yen gains appear to reflect a number of factors: unwinding of long trades against the likes of NZD and AUD (which has bene a position skew in recent months per CFTC). BoJ risks emerging (next week's meeting is Wednesday). Whilst no rate changes are expected, bond buying tweaks could be in focus.
• Broader market sentiment has had a distinct risk off tone today, with US equity futures slumping amid disappointment in terms of tech earnings (Nasdaq futures are off close to 1%). This backdrop, coupled with global growth concerns and softer metals prices, has added pressure to the likes of AUD.
• Regional equities are mostly tracking lower as well, with losses in Japan the largest amid sharp yen gains.
• NZD/JPY is sub the 200-day MA, last near 91.50, close to early May lows. AUD/JPY was last near 101.9, still above the 200-day (which is back close to 99.8). AUD/USD is under 0.6600, NZD/USD is at 0.5920, off 0.60%.
• US yields have ticked down a touch, but haven't been a theme today.
• Later the Fed’s Bowman and Logan give remarks and the ECB’s Buch, Lane and de Guindos appear. The Bank of Canada decision is also announced – a 25bp cut is forecast. In terms of data, US/European preliminary July PMIs and US June trade and new home sales are released.