Both the EUR and European Equities saw decent outperformance against their US counterparts yesterday.
The OAT/Bund spreads showed some calm yesterday with the spread falling 4 basis points from 0.76% to 0.72%. With the French snap elections coming up on Sunday, markets have already priced in a fair bit of risk premium on the fiscal side.
Arguably, the potential negative impact from a hung parliament (assuming Macron doesn't step down) or a far-right majority victory might already reflected in spread and implied volatility across the EUR pairs.
Also worth noting that this week is month-end, quarter-end and half-year end, so we might also be seeing some rebalancing flows in the mix, which will have nothing to do with the macro or idiosyncratic risks in play right now.
This article was written by Arno V Venter at www.forexlive.com.from Forexlive RSS Breaking News Feed https://ift.tt/L5jochM
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USDJPY getting close to 161 after taking out the previous intervention highs close to 161.20. Mostly likely quite a decent amount of stops triggered as we broke to new highs helping the pair higher.
With treading on fresh ground it means intervention watch is in overdrive in markets.
It's easy to blame the move in US yields for the gain, but to be fair the USDJPY did see a bit of recent divergence from US yields from the middle of the month.
A lot of this week's moves are difficult to trust since we have month-end, quarter-end and half-year end flows to deal with.
Nonetheless, lots of eyes on Japanese officials and the USDJPY today.
This article was written by Arno V Venter at www.forexlive.com.