Diverging Yields See JPY Continue Its Slide

Heading into today’s European trading session, the risk tone is mixed. Asia-Pacific indices and measures of volatility trade mixed, while safe-havens are pressured.

Leading Asia-Pacific indices to the upside is the Topix at +0.83%, followed by the Nikkei 225 at +0.69% and the ASX 200 at +0.56%. The CSI 300 and Hang Seng are both negative on the session at -0.98% and -2.39%, respectively.

In the FX complex, JPY is once again leading to the downside as the growing divergence between US and Japanese yields keeps the currency pressured. Furthermore, Reuters argues that “many investors are betting the yen has further to fall. The latest CFTC data for the week ending April 12 shows net short yen positions are the largest in three and a half years.”

In contrast to JPY and leading to the upside is AUD, with the commodity-linked currency supported by the latest RBA meeting minutes, which suggested that the central bank expects a further rise in inflation and therefore expects to raise rates sooner than was initially expected.

Looking ahead, today’s economic calendar is light on tier one data, keeping the market’s focus fixed on current themes, particularly monetary policy outlooks and their influence on external factors ranging from yields to the global economic outlook.