USD/JPY today broke through the August lows to the worst levels in six weeks. If the Fed can give it another nudge, USD/JPY threatens the lowest close since March.
There was a time when this chart would correlate with weakness in equity markets but in the era of the Fed buying everything that’s no longer the case.
Instead, it’s a signal on general US dollar weakness. One spot to keep a close eye on is the bond market. Treasury yields are in the middle of the range from the past month at 0.66% for 10s. To confirm this move, I would like to see a dip below 0.63%.
The average move on Fed days this year is -9.5 bps but the scope today is much lower because all the bullets have largely been fired.