USD/JPY: Yield spreads have narrowed in a JPY supportive manner - Scotiabank

JPY is strong, outperforming all of the G10 currencies.

Key Quotes:

"The broader market tone is dominant as market participants respond to political uncertainty in the U.S. 

JPY’s role as a safe-haven currency leaves it vulnerable to knee-jerk rallies in periods of risk aversion. 

Yield spreads have narrowed in a JPY supportive manner, and risk reversals are showing signs of a turn following the recent moderation in the premium for protection against JPY strength. 

Domestic releases may deliver added turbulence for JPY through the remainder of the week as we look to Wednesday’s (NA Tues. PM) trade and Friday’s (NA Thurs. PM) CPI."