It’s not having as bad a day as Al Gore, but its still a pretty bad day.
The primary driver has been risk aversion which undermines US Treasury yields and narrows the spreads Japanese investors ca harvest by moving some of the savings offshore.
The 2-year spread between the US and Japan is very highly correlated with the USD/JPY rate and that spread continues to contract. A Japanese investors picks up only 51 bp in yield, well below historical averages. The 200-day average is 70 bp.
Keep an eye on US yields. If they rise, USD/JPY is likely to follow.
88.95 is important support; stops are perched below that level.
