USD/JPY Moves to 96 Before Japan Opposition Announces BOJ Nominee Stance

The yen climbed against all of its major peers before Japan’s political parties announce their stance on the nominees to lead the Bank of Japan.

The three-month dollar-yen risk reversal rate slid as much as 36 basis points to negative 0.0325 percent yesterday, a level unseen since July 11, indicating increased demand for options to sell the dollar versus the yen. Japan’s largest opposition party rejected Kikuo Iwata’s nomination for BOJ deputy governor yesterday. The greenback maintained gains versus the euro before U.S. data today that may show retail sales rose.

News on Iwata “has helped knock down dollar-yen,” said Sean Callow, a senior currency strategist at Westpac Banking Corp. in Sydney. “It has gone way beyond what you can justify in terms of relative economic fundamentals and prospective action by the central bank.”


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