Data from the Depository Trust & Clearing Corporation shows dollar-topside bets outweigh bearish views this week. That includes $700 million on the 115.00 level, another $600 million going through on 116.00 calls, and $140 million on the pair reaching 133.00 within the next year.

Yen haven demand has also lost traction, as the French election result provided a market-friendly outcome, as shown by risk reversals, a gauge of market positioning and sentiment.

While demand for dollar-yen puts over the next month still outweighs that for calls, it does so at the lowest in almost two months. Dollar puts trade on a 38-basis-point premium over calls on the one-month tenor, which compares to an average in the past year of 105 basis points.

 

Eoin Treacy's view

The result of the 1st round of the French election acted a risk-on catalyst for global markets with the VIX dropping abruptly and the Nasdaq-100 running to new highs. Safe haven assets like the Yen, Dollar, bonds and gold on the other hand have experienced selling pressure.

The Dollar has rallied impressively against the Yen over the last three weeks and is now testing the psychological ¥115 area which offered resistance earlier this year. There is potential for a pause in this area, while a sustained move above it would confirm more than temporary steadying.

Meanwhile the Nikkei-225 future closed above 20,000 for the first time since 2015 today but is susceptible to a pause should the Yen find support.

The Topix 2nd Section Index experienced a short, sharp pullback in April but has bounced and is closing back in on the highs. While there is potential for a further pause below 6000, a sustained move below the trend mean would be required to question the medium-term uptrend.

Taiwan’s TAIEX has been flirting with the psychological 10000 level for most of the year and a sustained move above it would hold out potential for a return to medium-term demand dominance.