USD/AXJ is set to open higher across the board after the fallout from the China flash PMI reading continued in early Europe after a shocking run of PMI numbers from EZ countries headlined by Germany.
The overnight markets had a real "risk off" look with Gold, oil, metals, equities and risk currencies all tumbling in unison. The big winner however was the Japanese Yen which was up over 1.0% as players closed out long US Dollar positions after key supports gave way. USD/Latam witnessed massive US Dollar overnight UBS reports which could be a precursor to a repeat in Asia today. Central banks in Asia provided a cap of sorts yesterday providing ample US Dollar supply particularly in USD/INR and USD/KRW. If the central banks step away we might see a big void as USD/AXJ pairs move outside moderate ranges witnessed over the last two months into new territory.