S&P 500 — US Large Cap Index
FTSE 100 — UK Blue Chips
Euro Stoxx 50 — Eurozone Leaders
DAX 40 — German Equities
CAC 40 — French Market Index
Nikkei 225 — Japan Benchmark
Hang Seng — Hong Kong Index
Shanghai Composite — China Mainland
ASX 200 — Australian Market
TSX Composite — Canada Index
Nifty 50 — India Large Cap
STI Index — Singapore Market
KOSPI — South Korea Index
Bovespa — Brazil Equities
JSE Top 40 — South Africa Index
IPC Index — Mexico Market
Societe Generale strategists note the Japanese Yen (JPY) remains the main G10 laggard despite higher domestic yields and Bank of Japan (BoJ) tightening. With the 10-year JGB potentially rising toward 3.50% as further 75bp of BoJ hikes are expected, FX markets still show limited enthusiasm for the Yen, while USD/JPY trades above the 200-day moving average and near the 159 level.
Higher JGB yields not supporting JPY
“A quiet session overnight cemented the position of the JPY as the main laggard in G10 ten days into August, a vastly different trajectory compared to this time in 2024, when following unilateral dollar sales by Japan’s MoF, the currency was head and shoulders above the rest of G10 and scoring a 3% gain vs the dollar.”
“With another 75bp of tightening potentially to come by the BoJ by this time next year according to SG economists, we’re looking realistically at a 10y yield of around 3.50%, above the Bund.”
“The prospect of a positive premium for 10y Japanese over German yields is not sufficient however not to convince the FX markets of the attractiveness of the Yen.”
“EUR/JPY trades within 2.3% of all-time highs after clawing back 2.4% from the coordinated intervention low two weeks ago.”
“USD/JPY recovered above the 200dma and is back above 159 handle on dip buying.”
