JPY outperforming on risk aversion – Scotiabank

The Japanese Yen (JPY) is strong, up 0.4% against the US Dollar (USD) and outperforming all of the G10 currencies into Friday’s NA open, supported by sentiment in an environment of mild risk aversion, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

Markets eyeing US/Japan trade talks

"The domestic release calendar has been limited to stronger than expected household spending data, offering a positive end to a week that leaned toward disappointment (industrial production, housing starts, Tankan)."

"The outlook for relative policy remains supportive, despite the slight moderation in the BoJ’s hawkish bias, as policymakers look to continue with rate hikes following a near-term pause in response to US/Japan trade talks."

"US Treasury Secretary Bessent has highlighted Japan’s upper house elections (July 20) as a domestic constraint and an impediment to the conclusion of talks. For USD/JPY, technicals are neutral with an RSI offering no momentum as it hovers around 50. The range remains bound between 142.50 support and 148 resistance."