BoJ Monetary Policy Decision Steals Limelight

Tuesday saw USD/JPY move in tandem with gyrations in broader risk sentiment. The rate lost altitude eventually, as risk appetite turned sour, printing fresh one-week lows.

• Japan's Cabinet decided Tuesday that parliament will pick the new Prime Minister at an extraordinary session on Oct 4. This means that the general election will likely be held in November, after the new Premier appoints Cabinet members, delivers the customary policy speech and faces grilling by opposition lawmakers.
• Kyodo circulated a source report Tuesday suggesting that the government is "leaning toward at least partially lifting the Covid-19 state of emergency covering 19 prefectures including Tokyo at the end of the month".
• The BoJ will deliver their monetary policy decision today (see our preview here). USD/JPY overnight implied volatility has crept higher today, last sits at 7.00%.
• USD/JPY last sits at Y109.18, just shy of neutral levels. A move through Aug 16 & Sep 15 lows of Y109.11 would shift focus to Aug 4 low of Y108.72, a key near-term support. Bulls look to a break above Sep 13 & 14 highs of Y110.16, which would give them a green light for targeting Sep 8/Aug 13 highs of Y110.45/46.