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Analysts at Scotiabank explained that JPY is quietly consolidating this week’s decline and trading just below the midpoint of its October range.  

Key Quotes:

“The BoJ left its key policy settings unchanged””as expected””maintaining a policy rate of -10bpts and 10Y JGB yield target of 0%.”

“Inflation forecasts were revised downward and the balance of risk was revised. Risks to growth and inflation are now seen as being ‘skewed to the downside’.”

“Broader developments appear to have faded in terms of driving movement in JPY and yield spreads appear to be dominating.”

“The 2Y U.S.-Japan spread is now climbing back toward 300bpts and the 10Y spread has recovered nearly half of its recent compression.”

“Risk reversals are also fading their recent moves and the premium for protection against JPY strength is moderating from elevated levels.”