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Yen Up 1%, JPY TWI Now 5% Higher Over Past Month

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Yen's surge continues, the pair now up around 1% against the USD. This puts the pair at 152.35/40. We are rapidly tracking towards a test of the 200-day MA (near 151.50). We are already sub the 200-day EMA.

  • Recent factors remain firmly in play around risk off in the equity space (led by weaker Japan markets today), while metals commodity prices also continue to lose ground (weighing on AUD/JPY).
  • Yen gains are also consistent with on-going speculation of a Fed easing, the US-JP 2yr spread is back to +400bps, lows last seen in May last year.
  • Positioning is also being adjusted, with the most recent CFTC data still showing market shorts where some distance from neutral.
  • The JPY trade weighted index, per Deutsche Bank, is now around 5% firmer for the past month, see the updated chart we first presented yesterday. It is also around 6.3% from recent lows. As we noted yesterday, such extensions in the TWI can run out of steam after such a rapid rise.
  • The USD/JPY RSI (14) has also moved further into oversold territory.
  • Still such metrics may not don't matter much in the near term when markets are focused on position adjustment. Also, the JPY TWI is coming from very depressed levels. We are still 29% sub early 2020 levels.

Fig 1: JPY TWI Now Up 5% In The Past Month

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Yen's surge continues, the pair now up around 1% against the USD. This puts the pair at 152.35/40. We are rapidly tracking towards a test of the 200-day MA (near 151.50). We are already sub the 200-day EMA.

  • Recent factors remain firmly in play around risk off in the equity space (led by weaker Japan markets today), while metals commodity prices also continue to lose ground (weighing on AUD/JPY).
  • Yen gains are also consistent with on-going speculation of a Fed easing, the US-JP 2yr spread is back to +400bps, lows last seen in May last year.
  • Positioning is also being adjusted, with the most recent CFTC data still showing market shorts where some distance from neutral.
  • The JPY trade weighted index, per Deutsche Bank, is now around 5% firmer for the past month, see the updated chart we first presented yesterday. It is also around 6.3% from recent lows. As we noted yesterday, such extensions in the TWI can run out of steam after such a rapid rise.
  • The USD/JPY RSI (14) has also moved further into oversold territory.
  • Still such metrics may not don't matter much in the near term when markets are focused on position adjustment. Also, the JPY TWI is coming from very depressed levels. We are still 29% sub early 2020 levels.

Fig 1: JPY TWI Now Up 5% In The Past Month

Keep reading...Show less