JPY showing impressive gains vs. USD – Scotiabank

Japanese Yen (JPY) is entering Wednesday’s NA session with an impressive 0.4% gain vs. the US Dollar (USD), a mid-performer among the G10 in an environment of broad-based USD weakness, Scotiabank's Chief FX Strategist Shaun Osborne notes.

Spreads remain steady

"Market participants remain focused on Japan’s government bond market and the recent surge in yields, a consequence of the BoJ’s policy normalization and its scaling back of large-scale bond purchases."

"Policymakers at the BoJ have been speaking to market participants this week, in the context of Tuesday’s poor 20-year bond auction, as they are preparing to unveil further adjustments at next month’s policy decision in mid-June."

"Recent market turbulence is challenging the central bank’s plans for normalization. Trouble appears concentrated at the long end however, as we note the relative stability of US-Japan yield spreads at both the two-year and 10-year horizon."