An ongoing slide in the Nikkei preceded recent profit taking on the JGB bear trend and also on the S&P 500. The Nikkei can correct lower without damaging the larger bull trend that began in Q4 last year. Until basing signs in the Nikkei can emerge, we are wary of further short-term profit taking across assets, and also in the, so far, resilient bull trends, such as USD/JPY. While we would ultimately view USD weakness as corrective and a setup for further medium-term gains, short-term indications suggest that investors prefer to neutralise risk.
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Barclays