OPTIONS: Expiries for Oct08 NY cut 1000ET (Source DTCC)

• JPY remains weaker against all others early Monday. For much of last week, markets were speculating over the chances of Ishiba in a potential LDP vote to
  bring forward a party leadership election, but the PM has gotten ahead of any further uncertainty by announcing his resignation. So why is JPY weaker? Thatcherite MP Sanae Takaichi is a front-runner among many opinion polls - and also ran against Ishiba in the last leadership race, triggering JPY vol. While politically conservative, she's made clear her preference for easy monetary policy and a bigger role for fiscal spending - reminiscent of the Abenomics policy set from 2012 - 2020.
• EUR/JPY rallied to 173.91 overnight, but has stalled since. 173.97 remains the bull trigger here, clearance of which puts the rate at the best levels since last year. AUD, NZD extend their recent spell of strength, with NZD/USD just below Friday's highs of 0.5918. A rally through here and 0.5927 would break downtrendline resistance drawn off the early July highs.
• Firmer equity sentiment since the open has allowed the likes of AUD and NZD to outperform in G10 currency markets on Monday, capitalising on the bearish dollar sentiment following the softer-than-expected US employment report. As a result, AUDUSD (+0.41%) has traded within one pip of the Friday highs and the latest price action has helped the pair consolidate above short-term resistance of 0.6569, which was cleared last week. This places the market’s interest back on the 0.66 handle, of which we have only had one daily close above since the US election related volatility back in November 2024.
• Focus this week remains on the US inflation picture, with PPI and CPI prints due on Wednesday and Thursday respectively. With a September Fed rate cut now all but assured - a weaker price turnout this week could trigger further speculation over an easing step of over 25bps at next week's committee meeting.

• Firmer equity sentiment since the open has allowed the likes of AUD and NZD to outperform in G10 currency markets on Monday, capitalising on the bearish dollar sentiment following the softer-than-expected US employment report.
• As a result, AUDUSD (+0.41%) has traded within one pip of the Friday highs and the latest price action has helped the pair consolidate above short-term resistance of 0.6569, which was cleared last week. This places the market’s interest back on the 0.66 handle, of which we have only had one daily close above since the US election related volatility back in November 2024.
• Key resistance and the bull trigger are located at 0.6625 (Jul 24 high), of which a breach would strengthen the underlying bullish trend. The next targets for the move would be 0.6688 (Nov 07 high) and 0.6700, the 76.4% retracement of the Oct-Apr selloff.
• Japanese politics has also boosted AUDJPY (shown below) by a solid 0.62% today, with the cross hovering once again below some important chart levels. A break of 97.43 would place the cross at the highest levels since January. The 2025 highs come in at 99.17.

Source: Bloomberg Finance L.P. / MNI