Yen Tumbles To Cyclical Lows Again

Spot USD/JPY rips through recent cyclical highs (Y137.00) as good demand has emerged after the Tokyo fix, with regional players motivated by a couple of factors. This allows the yen to refresh multi-decade lows against the greenback.

• Expectation-beating NFP report released out of the U.S. after hours Friday fuelled hawkish FOMC bets, supporting U.S. Tsy yields. A degree of Tsy weakness has carried over into today's Asia-Pac session, with U.S./Japan 10-Year yield gap consolidating its recent widening.
• Domestic developments in Japan are equally important. BoJ Gov Kuroda stuck to his usual lines on monetary policy in his latest address, despite earlier speculation that the death of ex-PM Abe might undermine political support for the BoJ's powerful monetary easing in the longer term.
• Furthermore, a strong mandate handed to the ruling LDP-Komeito coalition in this weekend's Upper House election has been interpreted as a promise of stabilisation in domestic politics, after Japan experienced two changes of its prime minister in as many years (even as all of them hailed from the same party).
• Both the Nikkei 225 and TOPIX sit comfortably in the green, even if they trade slightly off earlier highs. Cash JGB yield curve has bear steepened, but U.S. Tsy yields have also cheapened across the curve.
• Spot USD/JPY last changes hands at Y137.08, up ~1 fig. on the day, with bulls setting their sights on the 1.500 proj of the Feb 24 - Mar 28 - 31 price swing at Y137.30. Further up is the 1.618 proj of that price swing at Y138.56.
• USD/JPY 1-month risk reversal is creeping higher, printing fresh monthly highs as a result. Reminder that it remains below par since mid-June.