JPY: Asia Wrap - USD/JPY Back Under Pressure
The Asia-Pac USD/JPY range has been 143.73 - 144.56, Asia is currently trading around 144.00. USD/JPY has been under pressure for most of the Asian session as US yields and Stocks both continue to drift lower.
- Local Investors Dump Offshore Equities: The most notable feature of last week's investment flows was strong selling by local Japan investors of offshore equities. At nearly -1.5trln in net selling, it was the largest outflow from this segment since early Nov 2022. It also marked the fourth straight week of selling for offshore equities.
- (Bloomberg) - “Pimco said long-dated JGBs look “really interesting” as a tactical trade after 30-year yields topped 3.2% for the first time in May.”
- Overnight USD/JPY collapsed after the CPI print and has continued to trade heavy in our session straight from the open. With US yields under pressure and the risk backdrop souring you would think the path of least resistance would be a move lower.
- Price is back in its recent 142.00 - 147.00 range and will need a break either side of that to get a clearer direction. Price action does suggest 142.00 is likely to be tested first.
Options : Close significant option expiries for NY cut, based on DTCC data: 143.00($1.28bm). Upcoming Close Strikes : 144.00($1.27b June 13), 145.00($4.87b June 16).
Fig 1 : USD/JPY Spot Hourly Chart
Source: MNI - Market News/Bloomberg Finance L.P
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GOLD: Gold Steadies from Last Night's Fall
- Gold steadied in Asia trading following its second largest daily decline this year overnight and gained +0.10% to US$3,239.52 from where it opened trading in Asia this morning gold at US$3,236.27.
- From the high of $3,431.77 on May 06, gold is now down over 5%.
- Positioning from Hedge Funds is much more neutral with CFTC data showing that bullish bets have been scaled back to their lowest in more than a year.
- Gold is likely to return its attention back now to the FED and and the direction of interest rates as trade wars risks appear to have subsided, for now.
- Gold has now traded below the 20-day EMA of $3,276.66 with the next technical level the 50-day EMA at $3,164.09.
FOREX: G10 Wrap - USD Breaks Resistance, Can it Extend ?
The BBDXY has had an Asian range of 1237.68 - 1240.11, Asia is currently trading around 1237. USD/JPY has edged lower after Japanese Finance Minister Kato said he will seek an opportunity to discuss currency matters with US Treasury Secretary Scott Bessent when the two are in Canada for a meeting of Group of Seven officials."*UCHIDA: WAGES EXPECTED TO KEEP RISING DUE TO TIGHT LABOR MARKET" - BBG. The USD/CNY fix was set at 7.1991. Today's fixing is sub the 7.2000 level for the first time since Apr 7. It comes despite the stronger USD index levels overnight, although some offset was from lower USD/CNY levels.
- EUR/USD - Asian range 1.1085 - 1.1117, Asia is currently trading 1.1115. EUR/USD has had a quiet session as the market digests the overnight moves. The market is still expected to use dips as a buying opportunity and dips back towards 1.09/1.10 should see buyers remerge.
- GBP/USD - Asian range 1.3170 - 1.3200, Asia is currently dealing around 1.3195. GPB broke through its support around 1.3200, if this break can hold we could target a move back to 1.3000 where buyers should be expected to return.
- USD/JPY - Asian range 147.73 - 148.48, the Asia session is currently dealing around 147.85. USD/JPY scythed through the 1.4700 area as shorts pared back some of their positioning. With stocks on a tear as momentum type funds are forced back into the market the USD will continue to benefit particularly against currencies like the JPY. This will now test the conviction of the USD bears short-term, but levels back towards 150/151 should offer good levels for those that want to express this view.
- USD/CNH - Asian range 7.1789 - 7.2045, the USD/CNY fix printed 7.1991. Asia is currently dealing around 7.1835. A lower fix even with the USD broadly higher across the board gave USD/CNH the impetus to extend lower, sellers should be found on any bounce back towards 7.24/25 again.
- Cross asset : SPX -0.38%, Gold $3236, US 10-Year 4.45%, BBDXY 1237, Crude oil $61.76
Data/Events :Ger ZEW Survey, US CPI
Fig 1: GBP/USD Spot Daily Chart
- Source: MNI - Market News/Bloomberg
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