USDJPY TECHS: Strength Could Mark Start of Reversal

Citi note that “even after adjusting for fiscal spending, Bunds lag by around 15bp on a regression with a basket of tariff-sensitive EUR equities”.

• They go on to write “into today’s tariff announcement, we prefer bullish/dovish exposure to EUR duration. For EGB spreads, the indifference towards richening Bund swap spreads has tended to be short-lived in the past”.
• “The recent EGB resilience might have been driven by relatively clean positioning, investors waiting for more clarity and prospects of more ECB rate cuts in case of punitive tariffs but ignores their growth implications.”
• As a result, they “retain bearish exposure to periphery spreads into the announcement, with the 10-Year BTP/Bund spread now close to the tight end of its range”.
• At a more granular level, they note that “tariff risks within EMU-11 seem most acute for Germany, Italy, and Ireland while Spain and France seem relatively shielded. This was likely behind the YtD underperformance of IRISH credit, which continued yesterday, despite still-strong fundamentals otherwise. These headwinds are likely to persist for now, although we believe value in the Irish credit is being built for the medium-term”.

Of note:

EURUSD ~1bn at 1.0800.

EURUSD 2.3bn at 1.0800 (thu).

USDJPY 1.19bn at 150.00 (thu).

EURUSD 1.53bn at 1.0800 (fri).

USDCAD 1.19bn at 1.4350 (fri).

AUDUSD ~1bn at 0.6300 (fri).

AUDUSD 1.43bn at 0.6350 (tue).

• EURUSD: 1.0700 (1.11bn), 1.0750 (525mln), 1.0790 (362mln), 1.0800 (972mln).
• USDJPY: 149.80 (278mln), 149.95 (299mln).
• USDCAD: 1.4300 (307mln), 1.4350 (425mln).
• NZDUSD: 0.5775 (427mln).

• EUR/USD: $1.0790-00(E1.9bln)
• USD/JPY: Y149.80-95($577mln)
• USD/CAD: C$1.3780($1.1bln), C$1.4400-15($924mln)
• USD/CNY: Cny7.3500($1.3bln)