[MARKET ANALYSIS] JPY rallies against all G10 peers, most pronounced against USD into payrolls on Friday

Further Yen strength which has led to the Buck underperforming against all G10 peers. JPY sees outperformance vs USD with the pair halted just short of 156.00 from a peak above 160 on Wednesday. The move comes absent of a headline driver, but there are several factors which weigh on the pair at the moment. Some suggest potential intervention/rate checks, however price action is more gradual, therefore not consistent with previous bouts, while others say the GPIF’s meeting has fuelled speculation it may raise domestic allocation targets. Other factors which have weighed in the past weeks are the clearer US influence on Japanese policy after Bessent met with various Japanese officials, this hawkish intent also evident in Ueda and Takata's remarks, the latter more so. This morning however, Bloomberg sources said the BoJ is set to favour a 25bps hike and a "flexible" future pace in policy; a report which sparked a dead cat bounce in USD/JPY which lifted back above 157.00. DXY (-0.3%) is being driven by JPY moves today with the index falling to a 99.16 trough before paring some of the move after the aforementioned Bloomberg sources. Eyes are on the Payrolls print due on Friday, albeit which has less relevance than typical given the Fed's keen eye on inflation impacts from the Middle East conflict. CHF is the second best performer, weaker only against JPY after hotter than expected GDP and CPI data. Following the inflation print, USD/CHF moved lower by 15 pips within a minute then extended the move to c. 25 pips within ten minutes at a 0.8083 low following the release. GDP also indicated a hot Swiss economy in Q2, albeit caveated by the chemical and pharma metrics which surged +10.5% during the period.