USD/JPY Tracks Recent Ranges, Ueda Reiterates Still Some Distance From Inflation Target

Yen was once again volatile post the Asia Pac close on Tuesday. Dips sub 138.00 got to the 137.70 region, after headline US retail sales printed weaker than expected. However, the control group print was stronger for retail sales, which saw the pair rebound. We got back above 139.00 (high of 139.14), before coming back to 138.80/90 by the close, which is where we currently track. Overall, this left yen a touch weaker for Tuesday's but still within recent ranges.

• Comments from BoJ Governor also added support to USD/JPY. The Governor stated that there was still some distance to sustainably and stably achieving the central bank's 2% inflation target, signalling his resolve to maintain ultra-loose monetary policy for the time being. The comments were made at a press conference for the G20 finance ministers and central bank governors in India (see this link).
• US yields ended mixed for Tuesday's session, the 2yr higher (to 4.766%), but the 10yr lower (3.785%). US-Japan 10yr swap rate spreads have stabilized somewhat in recent sessions above the +280bps level. Short term correlations (past 2 weeks) are higher, back to +82%, versus negative territory a little over a week ago.
• The local data calendar is empty today, with the main focus resting on Friday's national CPI print.
• On the crosses, yen outperformed the NZD (ahead of today's NZ Q2 CPI print), but relatively tight ranges prevailed against other majors.