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Mazen Issa, senior FX strategist at TD Securities, suggests that they have been of the view that USDJPY would consolidate in a 107/109 range and it looks nearly matured.

Key Quotes

“The negative surprise in ISM manufacturing has compelled a U-turn near 108.50. We think that if ISM services also slips this week, the range is liable to break lower. This would open a move back to 105.”

“The report that the GPIF will reclassify its hedged portfolio as domestic holdings suggests they have more room to buy unhedged foreign bonds – and reduce the need to up JGBs. This should imply 10yr UST-JGB spread compression and anchor USDJPY lower.”