Yen Breakdown in Progress

Yen crosses simultaneously broke out on a number of fronts on Thursday, hitting long-term extremes. It was an especially active day with GBP leading and AUD lagging.  

The calendar is light in Asia but look for continued focus on Japanese and Chinese stock markets.

Technicals dominated trading Thursday as many major levels were broken or patterns resolved:

There was no single catalyst for the moves but the market is growing more comfortable with the idea of a taper in December or January. Initial jobless claims at 323k compared to 335k helped the trade along with a strong Markit PMI but a soft Philly Fed curbed the enthusiasm, especially in bonds. The Fed's Bullard also removed a dovish risk saying a cut in IOER was only being contemplated if a downturn hits.

The weakness in the Australian dollar was product of jawboning from Stevens but anti-currency rhetoric usually only works if the currency is ready to tumble anyway. That it fell so hard on a day when US stocks were up 0.8% is a negative sign.

Early in Asia-Pacific trading, RBNZ assistant governor McDermott tried to talk down the kiwi but had no success. NZD/USD has now wiped out most of Thursday's losses and continues to fight off the head and shoulders pattern on the daily chart.