In other words, the reflation trade continues its modest comeback as a variety of commodities maintain their momentum with the CRB index up 0.5% on a day when oil is plunging. Jobs remain a black hole for the US economy and will remain one for months to come but the market is looking ahead, as it so often does. With trillions of stimulus and hopes of a bank bailout come Monday that does not whip out common shareholders, stock markets are bouncing. US shares are up about 1.5% on average about 40 minutes into the session.
Against that backdrop, EUR/JPY should benefit, and so it has. Much of the rise has been flow driven, but price action tends to color perceptions. The market perceives strong stocks to lead to a weak JPY, so few care about the details of why the JPY is weak beyond the readers of this page. (big options flows ramped USD/JPY higher yesterday and a one-off corporate order is the culprit today).
Bottom line: This is a wordy way of sayig risk aversion is easing, regardless of whther the risks are ebbig.
