JPY soft but holding on to recent gains - Scotiabank

The Japanese Yen (JPY) is soft, down marginally against the US Dollar (USD) but holding on to recent gains, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

Markets eye supportive Fed/BoJ

"The outlook for relative central bank policy remains supportive for the JPY, narrowing interest rate differentials in a manner that largely reflects repricing of the Fed rather than any developments at the BoJ. Messaging from the BoJ has been mixed, and hawkishness has been tempered on the back of trade policy uncertainty."

"Comments from BoJ board member Takata have leaned toward a 'temporary' pause and a resumption of rate hikes later this year. The next BoJ policy decision is on July 31, and markets are pricing a hold. Pricing for year-end has slipped somewhat, with 13bpts of tightening vs. 20bpts one month ago."

"For USD/JPY, technicals are neutral, reflecting the flat consolidation range that has been observed over the past couple of months with support in the mid-142s and resistance around 148."