USD/JPY Pulls Back From YTD Highs, No Major Changes Expected From The BoJ Today

USD/JPY highs for Thursday were reached late in Asia Pac trade, coming in around 141.50, before the pair pulled back sharply to 140.15 late in NY trade. We sit back at 140.25/30 now, with the yen still 0.14% weaker for Thursday's session. In contrast, the DXY pull back fell nearly 0.80%.

• Whilst yen benefited from the US yield pullback amid another rise in initial jobless claims (although other US data was mixed), the better US equity tone and higher commodity indices boosted broader risk appetite.
• Fairly low expectations of material changes at today's BoJ meeting is another headwind for the yen, which remains an outlier in terms of global monetary policy setting. See our preview here for more details. J.P. Morgan is one of the few banks which sees risks of a YCC shift today.
• Overnight vol is near 17%, but well below levels that prevailed prior to the Mar and Apr BoJ meetings. 1 week risk reversals sit above recent lows as well.
• Locally, the opposition is expected to file a no-confidence motion today, but PM Kishida has stated he won't dissolve the current parliament session, easing speculation of an early election (see this link).