EUR/USD, USD/JPY, GBP/USD flows - Trump yen concern; bonds hit some big levels; BoE priced in for Nov
USD/JPY sees some capping as Japan advertises Trump yen concerns
Cable at base area; BoE hint at Nov dab, now mainly priced in
Oil trims, still off lows ; phased deal talk, though US seems in no hurry for Iran concessions
Some capping on USD/JPY emerging, as Japan FinMIn Katayama suggests Trump at UN side talks expressed concern about the yen's weakness and viewed an undervalued yen as problematic. The pair was a bit extended on the charge higher anyway and the dip takes it to the key pullback support around 158. It needs to break below there to be shifting the recent upward pressure.
Otherwise, still the main preoccupations of US-Iran/oil and hawkish guidance. Recent Fed comments have all lined up behind the hawkish shift even from more moderate/dovish voices, supporting the stance that a tightening is needed to tackle inflation and that activity has been picking up. US10s got as high as 5.22% yesterday so charging in on that next 5 ¼ and just above, next reference and prior major highs, with 30s hitting 5.5%. Broad spillover also seen though overnight did see some better long end dip buyers for JGBs show as JP30s turned back from 4 ¼ %, pulling back 7bp from the day highs. It's held those tests 3 times since May suggesting some program buying might sit at that level.
Some balancing out on the FX side also from the spillover effect. Recent BoE MPC speakers including Lombardelli have also slightly shifted tone hinting that the recent extent and duration of energy price gains may mean a response is more likely. It is also worth noting the provisos suggesting rates are starting from a higher, restrictive level and that whether that means a tightening cycle is a totally different question. Nov BoE hike odds have now extended from balanced to almost 80%. Cable has been trying to level at the 1.32 level after the fast run down to this prior base, though 1.3160/1.3140 below are much stronger supports on any further dollar push.
In terms of oil, Brent nudges back but stays clear of $100 waiting for development. Suggestions that US-Iran are said to be exploring a phased deal, though there seems less optimism of a deal emerging before the midterms. The US stance seems to be that the blockade is working and Iranian demands are too extensive and will have to fade as the blockade pressure mounts.