USD, JPY, EUR, AUD flows: JPY weaker, scope for some recovery in riskier currencies
JPY weaker on Ueda comments, unemployment rise. Equities continue to gain

There isn’t a great deal on Friday’s calendar until the US ISM services data this afternoon. Overnight USD/JPY corrected higher after the decline seen through most of this week, helped by a rise in the unemployment rate and somewhat less hawkish than expected comments from BoJ governor Ueda. He indicated that the risk of being behind the curve was not that high, and that there was still uncertainty on the impact of tariffs. While he still indicated that rates are likely to rise if the BoJ’s economic projections are correct, he didn’t appear to be laying the groundwork for an October hike. On top of this, S&P 500 futures have made another new all time high this morning, suggesting risk sentiment remains positive which tends to work against the JPY. While yield spreads and risk premia still support further JPY gains, these look unlikely to materialise today. Other pairs have generally been quiet overnight, but the riskier currencies may have scope for some recovery helped by the continued strength in equities.
