USD/JPY: sentiment remains dominant - Scotiabank

With respect to USD/JPY, analysts at Scotiabank explained that sentiment remains dominant in the aftermath of this week’s Trump/Kim meeting and risk reversals suggest a continued erosion in the premium for protection against JPY strength vs. both the USD and EUR. 

Key Quotes:

"Yield spreads are also widening in a JPY-negative manner and the 2Y U.S.-Japan spread has almost fully retraced its decline from mid-May."

"Domestic risk is limited ahead of Friday’s industrial production data and BoJ policy decision."