USD/JPY Rebound Nears Hurdle

The US dollar continued to recover against the yen as oil and stock markets rebounded. The Australian dollar was the top performer while the yen lagged. Aussie home loans data and the RBNZ's Wheeler are due up later. A 46-minute Premium video on the existing and likely trades in FX, commodities and equity indices is posted below.

One thing that is increasingly clear is that market correlations are at a minimum. The dollar and euro moves over the past month have largely disconnected from bonds and stocks.

USD/JPY climbed for the fifth time in the past six days on Tuesday. The pair is nearing the 61.8% retracement of the post-BOJ drop. That technical level is at 109.49 with spot trading at 109.33.

Economic data was light but included March JOLTS rising to the best level in more than a year. Job openings jumped to 5757K compared to 5450K expected. Wholesale inventories also beat estimates at +0.7% compared to +0.5% in what will be a small bump to Q1 GDP.

The euro rallied above 1.14 for the third consecutive day but once again closed below as the pair continues a series of lower highs and lower lows.

The Asia-Pacific calendar features an appearance by RBNZ Governor Wheeler at 2300 GMT. The topic is the financial stability report so macro-prudential concerns might dominate but the press will surely ask about rates and the kiwi dollar.

Next is the 0130 GMT release of Australian home loans data. RBA cut expectations have continued to creep higher and the market now sees a 24% chance of a cut in June, rising to 73% by year end. The home loan data is unlikely to move the needed but it may be a small factor. It's expected to show a 1.5% decline.

The final data point to watch is the March preliminary Japanese leading index. The consensus is for a 96.3 reading but it's unlikely to move the market. The chatter around the latest JPY moves attributes it to intervention fears, that's something we warned about last week. The paradox of gains on intervention talk is that they make actual intervention less likely.