USD/JPY: Yen is under performing, one of the weakest across G10's - Scotiabank

Analysts at Scotiabank explained that the JPY is weak, underperforming most of the G10 currencies.

Key Quotes:

"The renewed focus on relative central bank policy leaves JPY vulnerable following last week’s sentiment-driven gains."

"The 2Y U.S.-Japan yield spread is pushing back toward last week’s multi-year high around 149bpts with risk of a break to levels last seen in 2008."

"However, interest rate differentials may struggle to retain dominance as we note the continued widening in risk reversals hinting to a rise in demand for protection against JPY strength."

"Sentiment remains an ongoing risk for JPY as we continue to highlight its risk profile and vulnerability to knee-jerk, haven-driven gains in periods of risk aversion."