Yen surges broadly in European session while deep selling is seen in Canadian Dollar, Euro and Sterling. The lack of movement in Australian and New Zealand Dollar so far suggested that the movements are not Asia or China related, even though Shanghai SSE dropped -3.72%.
Instead, investors are getting more nervous on Italy as its 10 year bond yield jumps to new 4.5 year high above 3.6000. On the other hand, German 10 year bund yield is down -0.045 at 0.532. That is, German-Italian spread is above the 300 alarming level.
EUR/JPY’s steep fall should confirm near term reversal for 127.85 support and possibly further back to 124.89 key support.
The development also drags down USD/JPY through 113.51 minor support for deeper pull back.
