Early Asian session gains in the yen appear to have been driven by a drop in the BoJ’s long-end JGB purchases, explained analysts at Scotiabank, adding that the broader developments remain dominant as JPY strengthens on the back of safe-haven flows in an environment of broad-based risk aversion.
Key Quotes:
"Critically, EUR/JPY has extended its decline through the 200 day MA for the first time since the French election in April 2017.
Risk reversals are showing signs of a turn, following their recent fade, hinting to a renewed rise in the premium for protection against JPY strength—vs. both the USD and EUR.
Domestic developments have been completely overwhelmed by the broader tone, with a remarkably muted and short-lived reaction to unexpectedly weak retail sales and industrial production."
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