Yen Draws Support From Risk Aversion

The yen caught a bid Tuesday as risk appetite soured on the back of China's regulatory crackdown, while several Covid-19 outbreaks across the globe continued to provide a source of worry. USD/JPY retreated past the Y110.00 mark, printing its worst levels in a week, with the 100-DMA limiting losses.

• In the shadow of the Olympic Games, Tokyo's daily Covid-19 case count hit another record, with the capital adding 2,848 new infections on Tuesday. PM Suga urged residents to "stay indoors and avoid all unnecessary travel" and "watch the Tokyo Games from their own homes".
• The Nikkei reported that Chiba prefecture eyes virus state of emergency with Saitama and Kanagawa.
• Focus in Japan turns to the summary of opinions from the BoJ's Jul MonPol meeting, due today, as well as unemployment, retail sales & flash industrial output, all due Friday.
• USD/JPY last seen at Y109.78, barely changed on the day. A fall through Jul 27 low/100-DMA at Y109.59/109.58 would open up Jul 19 low of Y109.07, which provides a key layer of support. Bulls keep an eye on Jul 23 high of Y110.59 and a break here would bring Jul 14 high of Y110.70 into play.