US TSYS: Yields Bounce

The Asia-Pac USD/JPY range has been 144.50 - 145.11, Asia is currently trading around 144.60. USD/JPY has tested lower after the BOJ but has stalled again back towards the 144.50 area, the focus will now turn to the press conference. A market that is very long JPY is having its conviction tested at the moment, especially in the crosses.

• On Hold As Expected, Pace Of Bond Taper Slows : The BoJ kept rates at 0.50%, as widely expected. That decision from the central bank board was unanimous. The bond buying program is unchanged through to end March 2026. The central bank did announce that it would trim bond buying by 200bn/per quarter from April 2026 next year. The current pace had been at a reduction of 400bn per quarter. There was one dissenter to this decision, board member Tamura, who wanted to keep the pace around 400bn. He also argued that long term rates should be determined by the market.
• (Bloomberg)- “Asian currencies are looking increasingly vulnerable as oil prices climb on the back of escalating Middle East tensions, threatening to reverse the supportive backdrop that’s buoyed regional FX in recent months. Historically, falling oil prices have gone hand-in-hand with stronger Asian currencies, given that the region’s biggest economies including China, Japan, India and South Korea are major energy importers.” See Graph Below
• USD/JPY continues to hold above its support back towards the 142.00 area, with oil surging again and US yields bouncing this pair has drifted back to the middle of its recent range. The JPY longs are feeling the pressure in the crosses.
• 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. The large interest around 145.00 expired overnight.
• The market still seems very confident of a move lower in USD/JPY but with positioning quite large now we have seen the risk of pullbacks increase. A break above 147.00 would be needed to challenge the conviction of any shorts.

• Options : Close significant option expiries for NY cut, based on DTCC data: 143.25.($350m). Upcoming Close Strikes : 146.00($1.85b June 20).

  Fig 1 : USD/JPY Vs Brent Futures

  

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

The AUD/USD has had a range of 0.6503 - 0.6536 in the Asia- Pac session, it is currently trading around 0.6530. The AUD tried lower initially as Trump told Tehran to evacuate, later headlines proposing talking between the US and Iran saw it bounce off the 0.6500 area.

• "WHITE HOUSE DISCUSSING WITH IRAN POSSIBILITY OF MEETING BETWEEN U.S. ENVOY STEVE WITKOFF AND IRANIAN FOREIGN MINISTER ABBAS ARAGHCHI, TRUMP TEAM PROPOSES IRAN TALKS THIS WEEK ON NUCLEAR DEAL, CEASEFIRE - AXIOS" - RTRS
• The AUD saw good demand sub 0.6500 and is back to testing the 0.6550 area.
• Price remains in the 0.6350 - 0.6550 range for now, a sustained break above 0.6550/0.6600 is needed for the move higher to accelerate. The way the USD is trading across the board points to this being tested at some point.
• Expect buyers to continue to be around on dips while the support in the AUD/USD holds, a close back below 0.6350 is needed to challenge the newly formed uptrend. 
• Options : Closest significant option expiries for NY cut, based on DTCC data: none. Upcoming Close Strikes : 0.6600(AUD 1.1b June 19)
• CFTC Data shows Asset managers maintaining their shorts, the Leveraged community though continued to build up their shorts again.

• AUD/JPY - Today's range 94.18 - 94.66, it is trading currently around 94.50. Choppy price action as the pair establishes a range between 92.00 - 96.00. A break back below 91.50/92.00 is needed to see the move lower regain momentum and the focus turn back to the year's lows again.

  Fig 1: AUD/JPY spot Daily Chart

  

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

The TYU5 range has been 110-15+ to 110.23 during the Asia-Pacific session. It last changed hands at 110-20, up 0-05 from the previous close.

• The US 2-year yield moved lower; it is trading around 3.948%, down 0.02 from its close.
• The US 10-year yield moved lower, it is trading around 4.43%, down 0.02 from its close.
• "WHITE HOUSE DISCUSSING WITH IRAN POSSIBILITY OF MEETING BETWEEN U.S. ENVOY STEVE WITKOFF AND IRANIAN FOREIGN MINISTER ABBAS ARAGHCHI, TRUMP TEAM PROPOSES IRAN TALKS THIS WEEK ON NUCLEAR DEAL, CEASEFIRE - AXIOS" - RTRS
• US President Trump has posted on Truth Social, stating that Iran should have signed the deal he told them to sign, while also re-iterating that Iran cannot have a nuclear weapon. He also noted that everyone should evacuate Tehran immediately.
• The 10-year yield has bounced strongly off its 4.30/35% support, this area needs to hold if yields are to move higher. The range looks to be 4.30% - 4.60% for now a break either side would provide a clearer direction. It seems traders for the moment are more concerned with the move in oil and the implications it has for inflation and the FOMC this week than buying treasuries as a safe haven.
• Data/Events: Retail Sales, Industrial Production, Business Inventories, NAHB Housing Market Index