Global factors continue to dominate Yen

Driver of the yen remains outside Japan as the BoJ remained sidelined at the last week's meeting, whereas the improving risk sentiment and general USD strength brought USDJPY back to 124. 

These moves have been consistent with our views expressed in the Global FX Quarterly. In the dollar there is trust, that the range-bound USD/JPY forecast around 123 has risks on both sides, i.e., upside on Fed hikes and downside on risk offs, both of which helped to push USD/JPY higher last week. 

Given eased concerns on Greece and stabilization in Chinese stock markets, the Fed hike outlook will continue to be the key driver of USD/JPY. Having said that, Japan's Q2 growth picture has been observed that it deteriorated recently. 

"Given the subdued May Composite Index of Consumption, Q2 real GDP has been expected to shrunk by 0.5% q/q saar, or the first negative reading in three quarters. While growth is expected to turn positive in Q3 with rising wages supporting consumption, economic data will be closely watched to determine the economic outlook", says Barclays.