JPY flows: JPY benefiting from lower US yields and geopolitics

The JPY has advanced overnight, helped by softer US yields, mainly due to some reduction in the Fed's QT, and some weakness in regional equities. Yield spreads were already pointing lower, but the dip in US yields after the FOMC has further reduced the yield spread, and the 150 level is now looking very much like a bridge too far for USD/JPY.  EUR/JPY is also looking as if it may have topped out above 164, with the US equity risk premium rising a little further overnight on the back of the dip in US yields. The JPY may also benefit from the current situation in Turkey, with the Erdogan government currently struggling to deal with an uprising that has been triggered by the detention of the mayor of Istanbul. We continue to look for further JPY gains from here, with USDJPY likely to approach 140 if we see significant equity market weakness.