Improved risk tone pushes the JPY lower across the board
Improved risk tone pushes the JPY lower across the board.
When we look at the inverse relationship between the JPY and risk, we tend to look at the USD first and foremost, but with stocks higher again at the start of the week, it is not USD/JPY which is leading the way at present. The cross rates are looking the more prominent at the present time, as the USD is not getting it all its own way in the current climate.
After a number of soft data readings, we have seen the greenback conceding some ground against its major counterparts and EUR/USD is the latest to show a little more intent on the upside as we retest levels seen at the better end of the range seen last week. Above 1.1050, the spot rate now looks towards the highs seen above 1.1080, with this week's expectations of a dovish ECB now baked into the market. As such, there is risk to the upside should the outcome fall short of expectations.
As we have already seen, Cable has also been pushing higher, and although the upper 1.2300's are providing congestion at the present time, any sell-off seems to be well contained as the odds of a no-deal seem to have been reduced somewhat as the bill to block a no-deal exit gets royal assent by the Queen.
Elsewhere, AUD/USD has been chipping away at the topside. Even though there has been little progress towards the 0.6900 level, the downside seems to be well-cushioned in the near term, while its CAD counterpart is also grinding away at bids to the downside.
As such, cross/JPY rates are showing better gains on the day, with GBP/JPY up 0.8% on the day compared to just 0.25% in USD/JPY. EUR/JPY is 0.5% higher, with AUD/JPY doing marginally better.