USD/JPY: watching the downside, Ab's scandal, risk reversals - Scotiabank

In respect to the yen, analysts at Scotiabank explained that the domestic risk continues to centre on PM Abe’s scandal, his falling approval ratings, and the implications for his Abenomics agenda—specifically the BoJ’s exceptionally accommodative policy. 

Key Quotes:

"Measures of implied JPY volatility are firming and risk reversals are showing a steady rise in the premium for protection against JPY strength vs. both USD and EUR. 

"The broader tone appears somewhat supportive for near-term movement JPY, given weakness in European equity indices and U.S. equity futures."