Risky assets continue to trade better supported. Despite the better tone to risk, USDJPY is struggling to rally, perhaps a reflection that the meeting in Tokyo between Abe and Kuroda yielded no new signals for easing.
Our economists think the BoJ could convene an emergency meeting to ease before the 28-29 July scheduled monetary policy meeting. We think the best way to position for monetary and fiscal easing in Japan is via long XAUJPY (which unlike USDJPY has a low correlation to US 10y yields, see chart) and we continue to recommend upside via a call fly.
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Japanese May retail sales were worse than expected with some small downward revisions to the April data as well.