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FOREX: Yen Unwinds Cross Gains As Canada/Mexico Given Tariff Reprieve

FOREX
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USD/JPY is tracking higher in early Asia Pac dealings, the pair last near 155.20/25. This is around 0.30% above end NY levels from Monday, but we remain within recent ranges. Risk appetite in the FX space is much improved following delays to Mexican and Canadian tariffs. This has seen yen safe haven demand wane.

  • From a technical standpoint, recent key levels have not been challenged. Upside resistance is likely at Jan 23 highs, at 156.75, while on the downside, 153.72 the Jan 27 low is a potential support zone.
  • In the cross asset space, global equity markets finished Monday trade down, but US futures are positive in the first part of Tuesday dealing. Eminis are up 0.60%, Nasdaq futures 0.80% firmer. Focus will be on whether China negotiations with the US potentially lead to a tariff delay as well, which could influence broader USD/risk trends. Yen is likely to underperform if we see further uptick in risk appetite.
  • US-JP yield differentials were relatively steady but sit a touch up from recent lows.
  • Yen lost around 0.50% against CAD on Monday, albeit in very volatile conditions as sentiment was whipsawed around by tariff headlines. MXN/JPY is back above 7.61, against intra-session lows on Monday of 7.2934, a +4% rebound. AUD/JYP is back to 96.50/55 after yesterday's brief dip sub 95.00.
  • On the local data calendar, we have just had Jan monetary base figures print, we were -2.5% y/y (not a typical market mover).
  • In the option expiry space, note the following for NY cut later today: Y152.00($500mln), Y154.00($663mln). 
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USD/JPY is tracking higher in early Asia Pac dealings, the pair last near 155.20/25. This is around 0.30% above end NY levels from Monday, but we remain within recent ranges. Risk appetite in the FX space is much improved following delays to Mexican and Canadian tariffs. This has seen yen safe haven demand wane.

  • From a technical standpoint, recent key levels have not been challenged. Upside resistance is likely at Jan 23 highs, at 156.75, while on the downside, 153.72 the Jan 27 low is a potential support zone.
  • In the cross asset space, global equity markets finished Monday trade down, but US futures are positive in the first part of Tuesday dealing. Eminis are up 0.60%, Nasdaq futures 0.80% firmer. Focus will be on whether China negotiations with the US potentially lead to a tariff delay as well, which could influence broader USD/risk trends. Yen is likely to underperform if we see further uptick in risk appetite.
  • US-JP yield differentials were relatively steady but sit a touch up from recent lows.
  • Yen lost around 0.50% against CAD on Monday, albeit in very volatile conditions as sentiment was whipsawed around by tariff headlines. MXN/JPY is back above 7.61, against intra-session lows on Monday of 7.2934, a +4% rebound. AUD/JYP is back to 96.50/55 after yesterday's brief dip sub 95.00.
  • On the local data calendar, we have just had Jan monetary base figures print, we were -2.5% y/y (not a typical market mover).
  • In the option expiry space, note the following for NY cut later today: Y152.00($500mln), Y154.00($663mln).