USD/JPY: Specs re-claim levels sub 107.00 in Tokyo

USD/JPY remains under strong selling pressure by specs-driven flows, with the lowest level reached so far around 106.75 from a NY close of 107.40, as the risk environment worsens in Asian hours, following the risk-off/supply theme seen in the last US session.

Risk aversion in Asia, JPY benefits

The Nikkei 225 has fallen by 0.46% ahead of the Tokyo lunch break, the Chinese A50 index futures are down by almost 0.80%, SP500 futures trade -0.15%, Gold is up by 0.30% since the NY close, last at $1,247.00, Copper has been recently beaten down despite a weaker USD (signs of market supply, Chinese woes), while the US 30-year Treasury yields continue to edge lower, last at 2.53, reinforcing the supply profiile currently present in the market.

Weak USD + risk-off = USD/JPY lower

The main driver behind the continuos sell-off in USD/JPY is the weakening of the USD in response to last Friday's US NFP shocker, which has led to an aggressive reduction in Fed rate hike bets both in June and July, wih the chances currently standing at 4% and 27% respectively, according to the CME Group 30-Day Fed Fund futures prices.

As Valeria Bednarik, Chief Analyst at FXStreet, notes in a recent video published in FXStreet Live Video section: "The market has lost faith in the possibility of a US rate hike this summer, follwoing poor employment data and no clues coming from Yellen. Currencies ..."