Yen Loses Its Poise Monday But 1-Month Risk Reversal Keeps Sinking

USD/JPY moved both ways on Monday amid gyrations in risk sentiment, but managed to eke out some gains come the end of the day. The rate went offered into the Tokyo fix, but recovered from there, as U.S. Tsy yields crept higher.

• The summary of opinions from the BoJ's most recent monetary policy meeting revealed little in the way of fresh insights, with members committed to maintain powerful monetary easing until they see evidence of sustainable wage-driven inflation.
• U.S./Japan 10-Year yield spread widened on Monday, extending its move away from a two-week low printed on Jun 23. Still, cyclical highs lodged on Jun 14 remain some way off.
• Options traders dissented, adding bearish USD/JPY bets. USD/JPY 1-month risk reversal kept faltering Monday, extending its losing streak to five consecutive days.
• Spot USD/JPY has shed 11 pips this morning and last trades Y135.35 as yesterday's buying pressure peters out, with the yen taking the lead in G10 FX space.
• From a technical standpoint, bears look for losses past Jun 23 low of Y134.27 would draw bearish attention to key support from Jun 16 low of Y131.50. Conversely, the initial bullish target is provided by Jun 2022/Oct 1998 highs of Y136.71/136.88.
• Japanese data releases pick up from tomorrow with the publication of monthly retail sales. Flash industrial output as well as unemployment, Tankan Survey & Tokyo CPI are due later in the week.
• In local news, Yomiuri reported that Japan is planning to host the next G7 summit in late May 2023 in Hiroshima.