Japan Expands State Of Emergency, Political Headwinds For Suga Remain

USD/JPY have held a 15 pip range so far, recouping its initial downtick as e-minis inched higher after the reopen. The rate last trades at Y109.37, little changed on the day.

• The Covid-19 state of emergency was formally declared in Hokkaido, Hiroshima and Okayama on Sunday. The gov't announced the decision on Friday, in an embarrassing U-turn, reportedly forced by a "rebellion" of experts sitting on the Covid-19 advisory panel. Yomiuri reported over the weekend that Gifu would also apply for an emergency declaration.
• The decision came at a time when public approval for the gov't is in free fall. The latest Jiji poll showed that support for PM Suga's cabinet fell to 32.2%, the lowest since he took office. In a separate Asahi survey, approval for the cabinet fell 7pp to 33%. Majority of respondents remain dissatisfied with the gov't's handling of the Covid-19 outbreak, with most also wanting the Tokyo Olympics to be cancelled/postponed.
• Highlights in Japan this week include PPI & flash machine tool orders (today), flash GDP (Tuesday), final industrial output (Wednesday), trade balance & core machine orders (Thursday) as well as CPI & flash Jibun Bank PMIs (Friday).
• Bears would be pleased by a slide through May 7 low of Y108.34, which would shift focus to Apr 27 low of Y108.08. Conversely, a jump above May 13 high of Y109.79 would open up Apr 9 high of Y109.96.