Japan Poised To Extend State Of Emergency, Final Decision Due Later This Week

USD/JPY finished last week on the front foot, after charting two weekly Doji candlesticks in a row. Friday's rally added fuel to the building bullish momentum and the rate has edged a handful of pips higher in early Asia-Pac trade today, with the greenback sitting atop the G10 pile. Broader risk aversion is evident, as concerns over coronavirus matters/vaccination campaigns continue to linger, while Chinese PMI data released over the weekend underwhelmed. The rate last trades at Y104.72, a touch higher on the day.

• The NNN reported (retrieved via BBG) that Japanese gov't is set to extend the state of emergency, but the final decision on the scope and length of the extension will be made this week after consultations with experts. A separate NHK report suggested that the gov't could extend its emergency declaration in Tokyo and Osaka, but might consider lifting it for Tochigi. A source speaking to Kyodo confirmed that the gov't prepares to extend the emergency declaration, due to expire on Feb 7, adding that it would be inevitable for 8 out of 11 prefectures covered by the declaration. Per the Kyodo report, the gov't will assess whether it can lift emergency in Tochigi, Aichi and Gifu and whether Okinawa needs to be added to the list of areas subject to the emergency declaration.
• LDP policy chief Hakubun Shimomura said in a TV programme that extending the state of emergency would create the need for further economic relief measures, particularly for women and nonregular workers.
• Bulls look to extend the recent rally beyond Jan 29 high of Y104.94 before targeting Nov 13 high of Y105.16. Conversely, losses past Jan 11 low of Y104.40, a recent breakout level, would open up former channel top at Y103.88.
• The final reading of Jibun Bank M'fing PMI headlines the Japanese docket today. The two remaining PMI readings come out Wednesday, while household spending data is due Friday.