USD / JPY Dips To New One-Month Low, Moving Away From Typical Yield Correlation

USD / JPY drops to its lowest level since September 22, just below 105.00

The weakness of the dollar is the major theme of the currency market today and it is evident that much of this rests on the hope of a stimulus deal coming up – one way or another.

While short-term headlines may still elicit some pessimism and a pre-election deal is unlikely to happen, that doesn’t stop bond investors from pricing in a stimulus package, as evidenced by the shift in market trends. Treasury yields so far today.


Despite this, the USD / JPY is down 0.5% to reach levels just below 105.00 as price action signals a break from the typical correlation of returns that we are used to. to see in the pair.

In a sense, the divergence here tells us that what is happening in the market right now is more than just a “risk” move. It has more to do with stimulus pricing (trade reflation narrative) and possibly election odds pricing in the United States, i.e. a planned “ blue sweep ”.


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