• JPY leads, USD lags on the day
  • European equities higher; S&P 500 futures up 0.1%
  • US 10-year yields down 5.4 bps to 2.861%
  • Gold up 0.2% to $1,954.10
  • WTI up 1.5% to $104.06
  • Bitcoin up 2.0% to $42,140

The yen weakened to its lowest level in two decades in Asia Pacific trading but caught a bid after hitting an air pocket with USD/JPY sliding from a high of 129.40 to a low of 127.60 in European morning trade.

The pair is still down nearly 120 pips now to 127.70 levels as we see a bit of a retracement amid fears of intervention and profit-taking on the way up towards the 130.00 level.

The drag in the pair is also weighing on the dollar across the board as we see the bond market selling also take a bit of a breather. 10-year Treasury yields are down over 5 bps to 2.86% after having hit a high of 2.98% during the early stages of the week.

The dollar drag helped to see EUR/USD climb to 1.0840 before hawkish remarks by ECB policymaker Kazaks on a July rate hike helped to prop up the euro to 1.0865 though that jump has since abated. GBP/USD is up 0.5% to 1.3050-60 as buyers continue to hold a defense of the 1.3000 level.

Elsewhere, AUD/USD is seeing a decent jump of 0.9% back above 0.7400 to 0.7430-40 levels as buyers seize back some near-term control in the pair. Put together the near-term dollar charts and that hints at a bit of a breather in the recent dollar momentum.

There isn't much leading the change in narrative though we are seeing USD/JPY be rather overstretched so perhaps that calls for a bit of a correction. Besides that, the usual drivers are still at play i.e. the bond market and inflation vs central bank debate.