The tepid moves from BoJ left policy stagnant at the late April meeting and there is quite sensible vision of more easing right now until the next projection update in October. Domestic data continue to point out little in the way of positive economic dividends from a weaker JPY.Headline GDP Q1 was better than expected at 0.6% QoQ basis against consensus at 0.4%. Despite a huge fall in JPY in the previous six months but the key components were poor and the net trade contribution was negative -0.2% point contribution.The consumption tax hike dropped out of the annual inflation rate.CPI inflation fell back to just 0.3% YoY in April and there is still no evidence of second round effects from previous JPY weakness or any evidence of rising inflation expectations amongst consumers.It is hard to tie the move to any particular domestic news flow. In recent months, much of this JPY selling was absorbed by an unwind of leveraged JPY shorts.Currency Option Insights: Write on Call Ratio 2:1 call ratio write can be implemented by selling 2 ATM Vega EUR/JPY calls for every half the number option size. Add positions when pair trending around spot 140.0180 levels. For instance, hedger should have holdings of 100,000 Euros for 2 lots of ATM call consisting 100,000 units each.This is now suitable for currenct circumstance as the underlying currency price will likely to experience little volatility in the near term.
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