USD, JPY, EUR flows: JPY down after firm US PPI
USD initilaly gained across the board after PPI, but riskier currencies recovered and JPY weakness on the crosses is the main impact
Stronger than expected US PPI initially saw the USD move higher across the board, but the riskier currencies have rallied strongly after an initial dip so that the USD is now only higher against the JPY. The data has had only a very modest impact on US yields, which are slightly higher, but there has been no move in spreads, as European yields have also edged up. EUR/JPY has been the big mover, and is now up 7 days in a row and by more than 5 figures from the lows on May 3. It continues to get support from the resilient equity market, low equity risk premia, and the positive tone to European data of late, but USD/JPY and EUR/JPY both look stretched, and intervention is possible near 157 in USD/JPY, especially since JGB yields have moved up more than US yields in recent days.
