USD/JPY: risk remain centred on geopolitical risk - Scotiabank

Analysts at Scotiabank noted that the JPY has been strong vs. the USD and was testing fresh two month highs, outperforming all of the G10 currencies with the exception of its safe haven peer CHF. 

Key Quotes:

"The broader tone of risk aversion is dominating and delivering support to JPY as market participants respond to geopolitical developments relating to North Korea."

"Measures of implied JPY volatility are up, and risk reversals are pricing a greater premium for protection against JPY strength across a range of time horizons. The absence of major U.S. releases should see Wednesday’s NA session risk remain centred on geopolitical risk."