EUR/USD, USD/JPY flows - Tech weighed, yields off; US CPI still the n/t decider
Asia tech remains pressured, yields off the highs, dollar flagging
US CPI remains the key n/t guide - if unable to rally then s/t exhaustion/pullback might kick in
Pressure in tech still a background theme early week, with the KOSPI dropping another 5% and off some 15% in the last week again. Semiconductors and Asia-ex-Japan off 2% and the Nasdaq off ½ % - if still well within the post Sep top range for the latter.
Dollar ceding a little bit of ground, with US yields also backing off, 10s some 17bp off the recent highs. Bigger test will be to see how it performs out of US CPI on Wednesday: if either it is benign as consensus, or perhaps more importantly if it's a strong number but doesn’t generate buying, suggesting nearby overbought exhaustion. Reaction is as important as the result to gauge near-term momentum. Technicals are looking a little overstretched for the dollar at present, even if the long-term trends remain solid.
JPY does still continue its recent trend of finding better support into risk dips, back more on the safehaven side of the fence, and generally seeing better local offers into USD/JPY gains, with better supply coming in towards 159.
It’s a relatively thin day ahead with little of note now prior to the Wed’s CPI release.