Yen risks balanced to the upside - Scotiabank

Eric Theoret, CFA, CMT FX Strategist at Scotiabank explained that recent JPY gains have been driven by sentiment on the back of a deterioration in the broader tone.

Key Quotes:

"Risk appears balanced to the upside as we consider the widespread rise in FX volatility. Risk reversals have stabilized following their recent, dramatic shift with a surge in the cost of protection against JPY strength."

"There was no discernible JPY reaction to Chief Cabinet Secretary Suga’s comments threatening action—‘watching FX markets with a sense of vigilance’. Japan remains bound by the 2013 G7 statement by finance ministers and central bank governors to ‘not target exchange rates."