Risk Retreat Favours Yen Thursday

Risk aversion sent USD/JPY tumbling on Thursday amid lingering Omicron worry and simmering Sino-U.S. tensions. The rate sold off sharply after news wires reported that the U.S. slapped sanctions on China over biometric surveillance, while U.S. equity markets lost ground, driven by losses in tech shares.

• Reports surrounding Japan's FY2022 fiscal plans have been doing the rounds. NHK reported that the gov't is preparing to compile a budget in the high Y107tn range, while Sankei noted that Japan is set to keep JGB issuance in the Y30tn range.
• Local health officials confirmed Japan's first Omicron case on Thursday, other than those found among inbound travellers from abroad. The Health Ministry's Covid-19 advisory panel warned that "it is necessary to make preparations for the expected spread in the country, including through community transmission."
• The BoJ will deliver their monetary policy decision later today. As usual, there is no fixed time of the announcement.
• Next week, focus turns to Japan's national CPI, due Friday.
• USD/JPY trades flat at Y113.68, with bears looking for losses past Dec 10 & 13 lows of Y113.23 towards Nov 30 low of Y112.53. On the flip side, the high print of Dec 15/61.8% retracement of the Nov 24 - 30 downleg at Y114.26/38 provide the initial topside targets.