USD/JPY: Potential for JPY strength after FOMC minutes  - Scotiabank

JPY has retraced intraday losses versus the dollar ahead of the FOMC minutes release. According to Eric Theoret, Strategist at Scotiabank, the broader tone presents the greatest near-term risk for JPY.

Key Quotes 

“Domestic developments have been limited in the absence of data releases and high-level commentary from key officials.” 

“JPY risks are mixed as we note the negative pull of yield spreads and positive support provided by the broad, impressive turn in sentiment. Risk reversals have shifted across a range of time horizons over the past week, and are pricing in a greater premium for protection against JPY strength. The broader tone presents the greatest near-term risk for JPY and we note the potential for strength in the event of turbulence around the 2:00pm ET Fed minutes release.”