USD/JPY: consolidating at fresh multi-month low - Scotiabank

JPY is quiet, trading flat from Tuesday’s close and consolidating at fresh multi-month lows, nearly 5% below its 18- month high from late March. 

Key Quotes:

"Local activity remains muted as a result of the Golden Week holiday and markets will be closed on Thursday and Friday."

"Widening interest rate differentials remain bearish for JPY, and the 2Y U.S.-Japan spread has reached a fresh 10+ year high above 265bpts."

"The 10Y spread is also climbing back toward last week’s high around 295bpts."

"Risk reversals are suggestive of a continued erosion in the premium for protection against JPY strength vs. the USD."

"They are steady for protection against JPY strength vs. EUR."