Tokyo Advisers Warn Against Signs Of Covid-19 Rebound, Yen Remains Near YtD Low

Thursday saw USD/JPY ebb lower, despite better risk environment. An initial uptick took the pair to a fresh YtD high, but it shed those gains into the Tokyo fix and remained heavy through the Tokyo/London sessions. A round of USD purchases into the WMR fix resulted in a bounce off intraday lows in USD/JPY, but the rate failed to retake neutral levels.

• The Japan Times reported that during yesterday's meeting of the Tokyo Metropolitan Government, advisers warned that there are early signs of another rebound in Covid-19 cases in the capital shortly after the state of emergency was lifted.
• In its latest economic assessment, the Cabinet Office reiterated that it sees continued weakness in the service sector amid signs of broader recovery.
• Japan's Tokyo CPI readings for the month of June headline the local data calendar today. Next week's highlights include unemployment & retail sales (Tuesday), flash industrial output (Wednesday) as well as Tankan Survey & final Jibun Bank M'fing PMI (Thursday).
• USD/JPY last seen at Y110.87, barely changed on the day. A clearance of yesterday's cycle high of Y111.12 would shift focus to the upper 1.0% 10-DMA envelope at Y111.59. Bears look for a dip through Jun 21 low of Y109.72, before targeting the 50-DMA at Y109.34.