JPY Trading Outlook (05-02-2015)

USD/JPY had already based at 117.24 ahead of the NY open, with the o/n high at 118 being rejection by the 21-DMA. US ADP came in below f/c but was close enough not to upset the USD. Tsy yields were already headed higher into next week’s refunding and remained supportive of USD/JPY until the ISM Services report featured a dive in the Employment index to 51.6 fm 55.7. Given that the vast majority of US workers are employed in service jobs, the broader 56.7 ISM reading was disregarded and Tsy yields slipped along with the USD. A drop in WTI, after another massive inventory build, gathered pace below 50 and below Tues’s low, which reinforced the drop in Tsy yields. 117.40-50 and 118 expires also tended to support USD/JPY in the NY morning. 117.60 was all she wrote for the NorAm rally, despite Fed’s Mester saying she’d be comfortable with a rate hike before H2. EUR weakness weighed on EUR/JPY and USD/JPY as Greek fears came back. EUR/JPY got below 134, retracing more of Tues’s surge through an close above key hurdles by 134.80. Abe – Kuroda friction on policy & JGB yield rise are also in the frame. Weekly Flows tonight.