• Overnight expiry FX options now include Tuesday's BoJ announcement

• No risk of rate change, but uncertainty over slowing of bond purchases

• Overnight expiry USD/JPY implied volatility is higher

• Implied volatility substitutes actual volatility - key to premium

• It's up 4.0 from last weeks average to reach 18.0 on Monday

• Premium/break-even is now 108 JPY pips from 84 JPY pips either direction
USD/JPY Overnight expiry FX option implied volatility

(Richard Pace is a Reuters market analyst. The views expressed are his own)