USD/JPY, DXY flows: Continues fast run, eying carry trim vs rotation

Main story remains unchanged as the yen continues its fast daily breaks towards 152~ lows having already extended in Asia on a break through 153 before the latest bounce. Data was with the grain with the upward GDP revision and the strongest real wage growth since ’21.

Clearly oversold but still on that charge. Obviously, some trading momentum behind the move now but also the impression that position adjustments have been worked in recent days, as well as exporter supply becoming more motivated.

In terms of any carry spillover, nothing spectacular but you can see the likes of MXN, BRL, ZAR and so on lose some of the wind in their sails to a degree the last couple of days, though only really stalling, no obvious pressure. USD/CHF also remains relatively supported with CHF/JPY as low as 189, Nov lows, from the 200-204 tops and with more scope to run on the rotation and valuation correction.

At the moment wider risk is still holding up while this action is speedy but steady rather than of the one day reset, volatility explosion variety, This despite ongoing re-escalation in US-Iran relations with the latest threats from Iran to retaliate with ‘economic warfare’. Brent front month still sitting just off $100.