USD/JPY is maintaining its bid following bullish signals (daily cloud break) noted last week and even the equity drop on Friday was not enough to catalyse a pullback. US yields are maintaining a bearish trajectory with US 2y rates threatening multi month range highs; a break above 32bp would likely trigger further USD/JPY strength. The rise in yields is hampering gold prices in the near term, though we view the pullback as corrective, especially as the USD continues to trade largely in a bearish manner against Asian currencies. We note the previous similarity in the swings between gold prices and the ADXY; USD/KRW (second largest component of the ADXY) is threatening support at its range base near 1100, a break below which would place pressure on a long term trendline near 1092.
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Barclays Capital