USD/JPY: BoJ supporting Yen - Scotiabank

JPY is rallying in response to the BoJ’s policy hold with added support from the broader tone of risk aversion. 

Key Quotes:

"The BoJ’s policy statement struck a relatively upbeat tone, affirming confidence in attaining its policy objectives as it maintains an exceptional degree of accommodation. 

The recent shift in the policy mix is likely to provide added support for JPY as officials shift from monetary to fiscal stimulus (recent delay to tax hike, rumors of stimulus later this summer). 

USD/JPY risk reversals have dropped to fresh multi-year lows for both the one month and three month tenor, reaching levels last seen in 2010, highlighting an impressive premium for protection against downside risk in USD/JPY (JPY strength).