USD, JPY flows: Little reaction to durables, USD/JPY looks expensive

No significant reaction to the US durable goods data, which was weaker than expected in the headline but essentially in line with expectations for the core, with the headline decline due to weakness in civilian aircraft. Even this is a dubious statistic, as the 45% m/m decline is entirely due to seasonal adjustment. The equity market has edged up after Monday’s declines, but yields haven’t risen enough to justify the USD/JPY recovery, so we still favour USD/JPY downside.