EUR, USD, CHF, JPY flows: CHF and JPY gain ground as yields and equities fall
Declining yields and equities in both Europe and US putting JPY and CHF on the front foot
The European currencies have been generally weak today, with the exception of the CHF, as yields have fallen back, with the market moving back towards pricing an ECB cut in June. The JPY and CHF are seeing gains against the USD as well as the European currencies this afternoon, with US yields also moving lower. This is probably as much a Friday phenomenon as anything, with some profit-taking on the long USD and short bond trades that were put on post-CPI. But with equities also falling back the JPY and CHF are the standard beneficiaries due to the implied rise in risk premia. We suspect EUR/JPY has topped out here medium term having nosed briefly above 165, with the rest of the year likely to see ECB rate cuts and potentially BoJ rate hikes.
