USD/JPY: fresh bullish legs, interest rate differentials eyed - Scotiabank

Analysts at Scotiabank noted that JPY is weak, testing fresh multi-month lows at levels last seen in early February. 

Key Quotes:

"Domestic developments have been limited and local activity is likely to remain muted as a result of the Golden Week holiday.

Widening interest rate differentials remain a dominant driver and the 2Y U.S.-Japan spread is testing fresh highs above 260bpts at levels last seen in late 2007."

"Measures of sentiment appear to be stabilizing however, and EURJPY risk reversals are suggestive of a renewed increase in the premium for protection against JPY strength."