USD/JPY: displaying a moderation in risk aversion - Scotiabank

Analysts at Scotiabank noted that the moderation in risk aversion has delivered some modest weakness in JPY over the past 24 hours. 

Key Quotes:

"Yield spreads have shown signs of stabilization following their recent (JPY-supportive) decline. Domestic risk lies with the release of Friday’s (Thursday NA PM) labor cash earnings data. Measures of implied volatility remain low and risk reversals are pricing a relatively small premium for protection against JPY strength."

"The 110 area remains crucial in terms of support. A break opens up the risk of a push to 108."