USD/JPY looks stuck for now in a coronavirus driven risk corridor between supports in the 109.00-62 range and below this year and last year's 112.23/40 highs and expiries mostly below there through month's end.
Though USD/JPY is weaker today, it's pullback pales in comparison to dollar losses versus the GBP, EUR and most other currencies because the yen is also being sold in a reduction of haven yen longs as stocks stage comebacks following the Fed's bazooka nN9N28J00Z, hopes for passage soon of a U.S. coronavirus backstopping bill and expectations of BOJ and GPIF moves to support local stocks and increasing demand for foreign bonds nL1N2BH0M2.
Rising Treasury-JGB yield spreads and stocks are supporting the risk and rates sensitive USD/JPY and offsetting much of the broader USD selling seen today.
And unlike EUR and GBP, 3-month JPY cross currency basis swaps rates remain deeply negative, illustrating lingering dollar shortages there despite Japanese banks today borrowing a massive $89.3 bln from the BOJ's swap line with the Fed nL4N2BH1FZ.
At -103bp last, that rate is between Friday's -64bp rebound close and Thursday's -139bp nadir.
And adding insult to an already injured Japanese economy, the Tokyo Olympics have been postponed until 2021 nL1N2BG163.