• USD/JPY option implied volatility back under pressure on Monday

• Benchmark 1-month expiry sold 12.25 to 12.05 in Asia, other dates follow

• Spot recovery/hold to low 140's weighs on FX volatility risk premium for now

• BoJ on Thursday but options market adding little, to no risk premium as yet

• However, 1-12-month risk reversals keep firm downside vs upside vol premium

• Shows market still biased toward more USD/JPY losses over time

• Outright demand for 3-6-month sub 140.00 strikes continues, too

• FX Options wrap
USD/JPY risk reversals


USD/JPY FXO implied volatility

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