Look to continued near-term JPY weakness - Scotiabank

Analysts at Scotiabank explained that JPY is a mid-performer among the G10 in an environment of mild risk appetite. 

Key Quotes:

"The broader tone remains key for JPY as we note the absence of any meaningful response to the release of stronger domestic industrial production data. Near-term risk lies with the release of the FOMC minutes and their impact on U.S. Treasury yields and spreads."

"The 10Y U.S.-Japan spread has widened more than 10bpts from last Friday’s low around 212bpts. JPY vols are softening and risk reversals continue to fade the recent build in the premium for protection against JPY strength. Look to continued near-term JPY weakness."