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Analysts at Scotiabank noted that JPY is up modestly vs. the USD and outperforming all of the G10 currencies on the back of renewed risk aversion resulting from concerns relating to Italy.  

Key Quotes:

“Measures of sentiment appear to be shifting and positioning is relatively imbalanced with a sizeable speculative JPY short.”

“The premium for protection against JPY strength vs. both the USD and EUR is remarkably low, reflecting the pro-risk market tone from early September.”

“Domestic developments have been limited with no major data releases and reduced BoJ bond purchases have lifted JGB yields and allowed the 10Y yield to reach 15bpts for the first time since early 2017.”