The recent JPY strength has turned sharply to weakness as the US-Iran has seen a tremendous spike higher and reversal in global safe haven bond markets. USDJPY is trading very close to the cycle highs here as we discuss below, not just the 19-day highs, which is the case in all of the other USD pairs where the USD is looking higher. Elsewhere, the new lows in the USDMXN today are a testament to the strength in MXN, while EURCHF has curiously sat out the interesting in shorting the lowest yielding currencies and CHF has failed to correlate at all with a struggling JPY. It is clear that EM currencies prefer to celebrate strong risk appetite rather than fretting the strong US dollar.
Today’s Breakout Highlight: USDJPY
USDJPY turned sharply back higher in sympathy with the weakness in global safe haven bonds and could be set for a run above 110.00 if yields continue to rise on solid or better US jobs data with tomorrow’s December jobs report.