Today’s employment report has fundamentally changed the state of play. US yields have fallen back below the 2.08/2.10 area which had acted as a firm cap on yields for so many months before breaking to the upside in mid-March.
Expectations for quantitative ease have done 270 degree turn this week. We went from about half-priced in early in the week, to fully priced out late in the week to being priced back in again at the end of the week.
That will impact USD/JPY most directly but will make the dollar that much less attractive across the board near-term.
European jitters will not go away, so short EUR/JPY looks like the best way to play from the fundamental perspective. 105.95/106.05 is key support for that cross in the near-term.
US 10s are down to 2.0550% in yield.
