Yen Underperforms As Risk Appetite Improves

Yen lagged the broader USD sell off for Monday's session. The currency finished close to flat versus Friday closing levels from last week, despite a 0.35% pull back in the BBDXY. Dips towards 149.40 were supported, post the Asia close, while a brief move above 149.75 drew selling interest. We currently track near 149.50.

• The technical set up hasn't changed for USD/JPY, with resistance/intervention threats still likely above the 150.00 level. The 20-day EMA sits back at 148.74, but key support is seen at 147.43, the October 3 low.
• One drag on the yen was the better tone in global equities, with the SPX up over 1%, amid a firmer risk backdrop. AUD/JPY pushed back above 94.80 against recent lows near 94.00.
• Focus remains on preventing the Israel/Hamas conflict from escalating through continued diplomatic efforts.
• US yields rose, with the 10yr back above 4.70%, but below recent highs near 4.90%. US data was slightly better than forecast (Empire manufacturing), while Fed speak saw Harker state the central bank should not be thinking about rate hikes now.
• On the data front today we have the Aug tertiary industry index (+0.3% m/m forecast against 0.9% prior).