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USD/JPY resumed gains at the start to the week, rallying for the fourth day in a row. The rate picked up a bid in the London morning, despite the imminent expiry of $924mn worth of options with strikes at Y104.45-60 at the 10:00 ET NY cut. The upswing was driven by a recovery in risk appetite, as earlier concerns about retail market dynamics eased. The greenback drew additional support from a round of soft EZ PMI readings, which pushed the DXY higher. USD/JPY showed above the Y105.00 mark for the first time since Nov.

  • Chatter surrounding a seemingly looming extension of Japan's state of emergency continues to draw attention, with Kyodo News citing an unnamed official as noting that PM Suga extend the state of emergency through Mar 7, with the formal decision coming up today. The official suggested that the Tochigi prefecture would be removed from the list of regions covered by the emergency declaration.
  • Elsewhere, Japan's Lower House passed a bill mandating fines for individuals and businesses who fail to comply with Covid-19 restrictions.
  • An NHK report noted that Japan's Health Ministry will hold a panel meeting on Feb 12 to discuss potential approval for Pfizer's Covid-19 jab.
  • USD/JPY last trades flat at Y104.92 and bulls look for a resumption of gains, which could take the pair above Feb 1/Nov 13 highs of Y105.04/16. Such a move would bring Nov 11 high of Y105.68 into play. On the downside, focus falls on Jan 11 high of Y104.40, a recent breakout level, followed by former channel top at Y103.85.
  • The local docket is very thin today, focus moves to tomorrow's final readings of Jibun Bank Services & Composite PMIs. Later in the week, Japan will release household spending data on Friday.
MNI London Bureau | +44 203-865-3806 |