Cautiously bearish on Yen - Scotiabank

Analysts at Scotiabank explained that relative central bank policy is dominant as the U.S.-Japan 2Y spread climbs toward 115bpts to levels last seen in late May. 

Key Quotes:

"We note that USD/JPY is trading well below the ~110 area that previously corresponded with a 2Y spread at 115bpts, its gap underscoring the importance of the broader market tone and JPY’s vulnerability to haven-driven gains in periods of uncertainty. 

Measures of sentiment remain bullish, investors hold a net long CFTC position, and options markets are pricing a premium for protection against JPY strength. 

We are cautiously bearish JPY."