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Downside Protection In USD/JPY In Demand

JPY

As we have flagged previously the last 24 hours hve seen 1-week USD/JPY risk reversals pull to the lowest level observed since the depths of the initial COVID outbreak, with plenty of event risk captured in that timeframe (BoJ decision, U.S. NFPs and U.S. CPI). This means that hedging for JPY strength has been evident. The measure currently operates a touch off lows witnessed over the last 24 hours.

  • A quick reminder that most do not expect a move at today’s BoJ decision, although this comes with varying levels of confidence, given the December surprise and the fact that this is outgoing Governor Kuroda’s final meeting.
  • The aforementioned move in riskies provides plenty of scope for a move in JPY no matter the outcome of today’s meeting.
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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