USD/JPY sits at Y106.10, virtually.......>

DOLLAR-YEN: USD/JPY sits at Y106.10, virtually unch. on the day, after operating

within a 195 pip range on Monday, driven by swings in risk appetite.

- The initial risk-off mood, noted in early Asia trade on Monday, not only

lifted JPY to the top of the G10 pile, but also prompted USD/JPY to plumb a

fresh YtD low of 104.46. Several pessimistic signals from over the weekend,

including the escalation in U.S.-China trade war, inspired caution. However,

risk sentiment recovered gradually through later in the session triggering an

upswing in USD/JPY, which was extended through European & U.S. hours.

Conciliatory comments from both the U.S. & China, coupled with the scaling back

of U.S. Pres Trump's normally combative trade rhetoric did the job.

- Japanese MoF will seek a 1.6% Y/Y debt service boost in FY20 budget, per Jiji.

- On the technical front, bulls look for a rally above Y106.65, the 76.4%

retracement of the YtD range, which coincides with the highs of Aug 21 & 22. A

fall below the Y106.00 mark would expose the Aug 12 high of Y105.69. 

- BoJ's Suzuki speaks on Thursday, while Friday will see the release of Japanese

economic activity data, Tokyo CPI figures and the next round of BoJ Rinban ops.