Yen: hitting fresh two month lows vs the US dollar - Scotiabank

Analysts at Scotiabank explained that the JPY is soft hitting fresh two-month lows and threatening a push to levels last seen in mid-March. 

Key Quotes:

"Domestic releases have disappointed with an unexpected contraction in machine orders and softer than expected current account figures.

Comments from Gov. Kuroda have also delivered pressure as he highlighted the need to ‘adjust policy as needed’ in response to the BoJ’s progress toward its 2% inflation target."

"The BoJ has been a clear outlier among its G4 peers over the past few weeks, highlighting the need to maintain exceptional levels of accommodation as others have shifted toward policy normalization."

"Yield spreads have widened in a JPY negative manner, and bearish JPY positioning (according to CFTC data) has increased. In options markets, measures of implied JPY volatility appear to be moderating and risk reversals are suggestive of an erosion in the premium for protection against JPY strength."