The USDJPY is moving sharply lower after flash PMI data, US new home sales, and Richmond Fed manufacturing indices all shocked the markets with lower values.
Of particular focuses is the sharp fall in new home sales. The shoe dropped hard in the real estate market as inventory rose to a 9 month level (from 6 months last month). The higher mortgage rates have increased monthly payments by over $450 since beginning of the year on the average price. That is pricing buyers out of the market.
The silver lining (maybe) is yields are sharply lower as markets price in the expectations that the Fed may have to taper their tightenings earlier than expected.
Looking at the USDJPY, it has moved down to test the 50% midpoint of the last trend move higher from the end of March corrective low. That level comes in at 126.306 (see daily chart above. The low price just reached 126.38.
Looking at the hourly chart below, the 50% level corresponds with swing levels going back to mid April before the price shot higher on April 18 and April 19. A move below that level would open the door for a rotation back down toward the 61.8% retracement at 125.14.
Looking at the US treasuries :
- 2 year yield 2.485, -14.0 basis points
- 5 year yield 2.73, -13 point basis points
- 10 year 2.736, -12.0 basis points
- 30 year 2.964, -9.2 basis points
Looking at the daily chart of the 10 year, the yield is down to the lowest level since April to 27th when the yield moved to 2.717%. The low yield today has reached 2.733% so far. The yield is down from a high reached on May 9 at 3.203%.
