With respect to USD/JPY, analysts at Scotiabank explained that sentiment remains dominant in the aftermath of this week’s Trump/Kim meeting and risk reversals suggest a continued erosion in the premium for protection against JPY strength vs. both the USD and EUR.
Key Quotes:
“Yield spreads are also widening in a JPY-negative manner and the 2Y U.S.-Japan spread has almost fully retraced its decline from mid-May.”
“Domestic risk is limited ahead of Friday’s industrial production data and BoJ policy decision.”
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