Scotia Bank – USD/JPY downside limited, bullish on fundamentals

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Here is from Scotia Bank on the Dollar-Yen:

“Fundamentals are bearish (USD/JPY bullish) as we consider the continued widening in 2Y yield spreads, trading above 110bpts to levels last seen in 2008. Meanwhile, options prices suggest a continued rise in demand for protection against JPY gains (USD/JPY downside).  The tentative nature of the broader market tone is one in which JPY remains vulnerable to short-lived, haven-driven gains.”

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