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Jun 13 - 04:55 PM

USD/JPY - Fleeting 23-Year High Before Global Derisking Triggers A Dip

By Randolph Donney  —  Jun 13 - 02:55 PM

  • Risk-off dip after 135.22 high faltered by 2002's 135.20 EBS peak

  • Haven yen up far and wide amid sharp global risk reduction

  • Huge jumps in Tsy yields and EZ yields since hot inflation results

  • U.S. inflation at 8.6%, EZ at record 8.1% sent yields soaring

  • 2-yr Tsy-JGB yields explode from 2.89% Thur to 3.30% on Monday

  • Weakens net present value of future earnings, slams riskier assets

  • Yen, as a key funding currency, the only currency to gain on USD today

  • USD/JPY would need view that peak Fed hikes are priced in to correct

  • That looks unlikely, though pullback to reset RSIs is possible nL1N2Y015I

  • Eyes on BOJ YCC operations Tues after 25bp 10-yr yld cap was cleared

  • Any sign of cap expansion would help yen, at least at the margin

  • Support is clustered near 133. Close below needed to signal bigger slip

For more click on FXBUZ


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Source:
Refinitiv IFR Research/Market Commentary

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