Yen Garners Strength On Flight To Safety

A flight to safety applied pressure to USD/JPY on Tuesday, sending the pair to fresh one-week lows. The JPY was the best performer in G10 FX space, with the USD just behind, as both benefited from safe haven demand.

• The Nikkei reported that Japan considers tighter alcohol curbs in the Tokyo area, while Mainichi noted that officials could ban fans at all Olympic venues.
• The Cabinet Office trimmed its growth forecast for FY2022 to +3.7% Y/Y from +4.0% projected in December.
• All but one of 18 economists surveyed by BBG said that PM Suga will unveil a new stimulus package before autumn's general election. The median forecast of its size was Y20-30tn.
• Looking ahead, Japan's BoP current account balance & Eco Watchers Survey will take focus on Thursday.
• USD/JPY last sits at Y110.64, barely changed on the day. Bulls see Jul 2 high of Y111.66 as their initial target and a break here would open up Mar 24, 2020 high of Y111.71. Bears would be pleased by a fall through Jun 30 low of Y110.83, which would expose Jun 21 low of Y109.72.