Analysts at Scotiabank explained that the JPY is strong
Analysts at Scotiabank explained that the JPY is strong, up 1.80% vs. the USD and outperforming all of the G10 currencies along with gold, rallying in an environment of broad-based risk aversion resulting from political uncertainty in the U.S.
“Disappointing domestic machine orders data have been disregarded, and the broader narrative appears set to dominate into and throughout Wednesday’s NA session.”
“Measures of implied JPY volatility are rising, and risk reversals are suggestive of a broad firming in the premium for protection against JPY strength. The decline in U.S. Treasury yields is also providing justification for JPY strength on the basis of narrowed interest rate differentials.”
“The near-term balance of risk appears to favor JPY gains.”