FOREX: JPY Crosses - JPY Longs Remain Under Pressure, Even While Risk Turns Down

• China released its new and used home price data for May today and prices have turned down again.
• New home prices were down -0.22% MoM in May, from -0.12% in April representing the 24th consecutive downturn and the worst result since November last year.
• Used home prices were down -0.50% MoM in May, from -0.41% in April and have not printed a positive print since April 2023.
• New home prices rose in 13 cities in May, down from 22 in April
• Used home prices rose in just 3 cities in May, compared to 5 in April.
• No cities have year on year used price gains.
• Shanghai new homes rose +0.7% MoM; +5.9% YoY
• Beijing new home prices -0.4% MoM; -4.3% YoY
• Shanghai existing home prices -0.7% MoM; -0.1% YoY
• Beijing existing home prices -0.8% MoM; -0.7% YoY

• China released its new and used home price data for May today and prices have turned down again.  
• New home prices were down -0.22% MoM  in May, from -0.12% in April representing the 24th consecutive downturn and the worst result since November last year.  
• Used home prices were down -0.50% MoM  in May, from -0.41% in April and have not printed a positive print since April 2023.  
• New home prices rose in 13 cities in May, down from 22 in April
• Used home prices rose in just 3 cities in May, compared to 5 in April.  
• No cities have year on year used price gains.  
• Shanghai new homes rose +0.7% MoM; +5.9% YoY
• Beijing new home prices -0.4% MoM; -4.3% YoY
• Shanghai existing home prices -0.7% MoM; -0.1% YoY
• Beijing existing home prices -0.8% MoM; -0.7% YoY

The BBDXY range Friday night was 1201.10 - 1207.13, Asia is currently trading around 1203. The US tried to bounce on Friday night but closed really poorly, once more struggling to hold onto its gains. The USD’s muted reaction to the events on Friday will have the market again questioning if it still has a role to play as a safe haven ?

• Bloomberg - “The US currency has displayed a decreased sensitivity to bouts of risk aversion of late, and has instead followed US economic data more closely. Prior to the Middle East escalation, the narrative for the dollar was one of extended weakness as benign inflation prints emboldened traders to add to their bets on Federal Reserve interest-rate cuts by year-end. ”
• Because of consensus the market will be positioned the same way and USD shorts will be prone to some challenging bounces. That's why the price action on Friday does stand out as normally you have expected these positions to have been more challenged in that environment. Is there more to come ? If not that was a pretty poor attempt at a correction.
• The BBDXY rejected the 1225 area pretty strongly, the USD should continue to be met with supply while this 1225/30 area caps price. 
• There is a broad consensus that the USD is set to embark on a decent move lower as the world reduces its exposure to the US and repatriates a lot of these flows.

• We are testing the key Weekly support around the 1200 area in the BBDXY. A break below here could signal the move is about to accelerate.

  Fig 1: CFTC USD Data

  

  Source: MNI - Market News/Bloomberg Finance L.P