USD/JPY Retraces Initial Downleg, Yen Remains Broadly Firmer

USD/JPY re-opened on a softer footing and extended losses through last week's lows to Y108.51, but retraced the move despite the lack of any fresh headline catalysts. It last trades at Y108.93, a touch higher on the day, with both sides of the pair outperforming the rest of their G10 peers as the space digests weekend risk events. Some have attributed the initial downswing to the unwinding of TRY/JPY by "Mrs Watanabe" (Japanese retail accounts) amid a slump in the lira. Worth flagging that $1.1bn of USD/JPY options with strikes at Y108.75 expire today.

• A magnitude 6.9 earthquake hit off the northeastern coast of Japan, causing shaking in Tokyo & prompting the authorities to issue a (later lifted) tsunami warning for Miyagi prefecture. The quake left some 200 buildings in Miyagi without power and led to the suspension of some bullet train services.
• Tokyo 2020 CEO Toshiro Muto confirmed that the Olympic Games will take place without foreign spectators. The decision on the participation of the Japanese audience will be taken in Apr.
• Kyodo circulated a fresh poll suggesting that 65.6% of Japanese respondents believe that the national Covid-19 vaccination campaign is too slow, while 82.2% were worried about the spread of new coronavirus variants. Nonetheless, the approval for PM Suga's cabinet edged higher to 42.1% from 38.8% recorded in Feb.
• As a reminder, the Covid state of emergency in the Tokyo area has ended on Sunday.
• Bulls look for gains past Mar 15 high of Y109.36 before targeting Y109.56, the 61.8% retracement of the Mar 2020 - Jan 2021 slide. Bears would be pleased by a dip through Mar 10 low of Y108.34, which would shift their focus to Mar 5 low of Y107.82.
• Final machine tool orders (Tuesday), flash Jibun Bank PMIs (Wednesday) & Tokyo CPI (Friday) take focus in Japan this week.