JPY is outperforming with modest gain – Scotiabank
The Japanese Yen (JPY) is up 0.2% against the US Dollar (USD) and outperforming all of the G10 currencies as we head into Friday’s NA session, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

The Japanese Yen (JPY) is up 0.2% against the US Dollar (USD) and outperforming all of the G10 currencies as we head into Friday’s NA session, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

Markets eye fracturing LDP coalition and consider implications for BoJ

"Political developments are offering stability to the yen as market participants assess the collapse of Japan’s governing coalition and consider its implications for the BoJ, its independence, and the central bank’s tightening plans. Yield spreads remain supportive and much of the yen’s recent decline has been driven by sentiment – as show by USD/JPY’s tight correlation to risk reversals."

"This week’s fundamental releases were mixed, as softer labor cash earnings data were balanced by stronger trade and PPI figures. Markets are currently pricing 4bpts of tightening for the October 30 BoJ decision, and 14bpts by December – down from 14 and 19bpts, respectively, as of this time last week."

"For USD/JPY, we note the possibility of a bearish outside reversal in the event of a break below Thursday’s 152.14 low, and see USD/JPY’s latest rally as overbought with and RSI at 70."

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