State Of Emergency Tweaks Debated

USD/JPY retreated Thursday as the greenback turned its tail amid reassessment of the latest FOMC minutes, which revealed that some policymakers were open to "taper talk" at upcoming meetings. The rate gave up all of its Wednesday's gains as a result, despite possible Gotobi Day flows.

• PM Suga confirmed that today officials will debate declaring a Covid-19 state of emergency in Okinawa. Separately, NTV reported that the gov't considers extending emergency in Tokyo & Osaka beyond the current expiration date of May 31. Mainichi provided tentative timeframes, noting that the Okinawa declaration could last from May 23 through Jun 20, while virus emergency in Tokyo & Osaka could be extended by around 2-3 weeks.
• Japan approved Moderna & AstraZeneca Covid-19 vaccines for domestic use, but NHK reported that it doesn't plan an immediate roll-out of the Astra jab. Meanwhile, Japan's inoculation campaign is lagging and the nationwide vaccination rate is the lowest among all OECD countries.
• A member of the Finance Ministry's debt-management panel told BBG that meeting the target of balancing the budget by FY2025 is "pretty much impossible," as tax hikes or spending cuts required to balance the books would entail a significant economic setback.
• Monthly CPI and flash Jibun Bank PMIs headline the local docket today.
• Next week's highlights include final machine tool orders (Tuesday) as well as unemployment & Tokyo CPI (Friday).
• USD/JPY last sits at Y108.80, little changed on the day. A fall through May 7 low of Y108.34 would shift bearish focus to Y107.48, where the rate bottomed out on Apr 23. Conversely, gains past May 13 high of Y109.79 would expose Apr 9 high of Y109.96.