USD/JPY Recovery Continues, Weekly Highs Within Sight

USD/JPY tracks around session highs in recent dealings, near 146.20. This is comfortably above Thursday session highs, but we remain sub Monday session highs around 146.40. Beyond that lies the ~146.60 level, which we topped out at back on the 17th of August.

• US-JP 10yr swap rate differentials are drifting higher, last near +312.5bps, but this is below highs from the start of the week around +322bps. The mixed Tokyo inflation data earlier (weaker than expected headline, but sticky core/services inflation) hasn't impacted FX sentiment materially.
• The 1 month risk reversal sits off recent highs, last at -0.79, with August highs sitting at ~-0.50. 1 month implied vol is ticking up, but at 9.7% remains towards the bottom end of recent ranges.
• The focus is now on the Jackson Hole symposium in the US where Fed Chair Powell delivers remarks during the US session later.