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Yen Weakens Amid Risk Rally, USD/JPY Grinds Further Towards Y150.00


USD/JPY extended its winning streak to nine consecutive sessions Monday as recovery in risk appetite sapped strength from the yen.

  • Equity benchmarks rallied across the board, while the VIX index fell ~2%. Sentiment was boosted by the S&P 500 moving above a key technical threshold and fiscal comments from the new UK C'llr who ditched most of the controversial proposals of his predecessor.
  • USD/JPY ground higher despite slight narrowing in U.S./Japan yield differentials. 2-year gap was 5.9bp tighter come the end of the day, while 10-year spread shrank 1.2bp and returned below the 450bp level.
  • Continued gains in USD/JPY keep participants on intervention watch, albeit officials flagged that a stealth intervention is on the table. They stuck to a familiar script Monday, signalling readiness to take "bold action" if needed.
  • Spot USD/JPY last seen at Y148.96, down 7 pips on the day. The rate sits near trendline resistance (Y149.45) drawn off Apr 28 high, next topside target is the psychological Y150.00 figure. Bears look for a pullback under Oct 5 low of Y143.53.
  • The government remains under pressure over its links with the "Unification Church" as hearings in the Budget Committee provided an opportunity for opposition lawmakers to examine ministers over the matter.
  • Reminder that BoJ's Adachi will speak tomorrow, Japan's trade data are due Thursday, while national CPI will be published Friday.

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