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FOREX: USD/JPY's Impressive Intraday Bounce Still Short of Weekly High

FOREX
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  • Following the strong JPY rally this week, a moderate reversal for US yields  has seen the Japanese Yen retrace substantially overnight. USDJPY stands up  0.87% on the session, having risen back above the 156 handle, where it has been consolidating across the European morning. USD/JPY's intraday bounce has been solid and one-directional, however the pair remains lower on the week, and just over 100 pips off the opening levels printed Monday. JPY is the poorest performer in G10.
  • NZD trades well, higher against most others to keep NZD/USD within range of the cycle highs and notable resistance at 0.6198. Clearance here would put the pair at the best levels since mid-March. Moves follow the firmer-than-expected print for China's Caixin Services PMI for May (54.0 vs. 52.5), which proved more market-moving relative to the mixed Italian / Spanish services PMIs released this morning.
  • The Bank of Canada rate decision set for later today is expected to see the first cut of the cycle, with consensus looking for a 25bps cut to 4.75%. That said, a sizeable minority see the Bank holding until July (or later), leaving markets ~80% priced for a cut today. Those that see a July, rather than a June, cut cite Fed re-pricing, the dangers of US-CA rate differentials and the still-booming local housing market.
  • Outside of the BoC, ADP Employment Change is set to cross ahead of the ISM services index data for May. Both figures will be carefully watched ahead of Friday's Nonfarm Payrolls release, at which markets expect 185,000 jobs added over the month. 
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  • Following the strong JPY rally this week, a moderate reversal for US yields  has seen the Japanese Yen retrace substantially overnight. USDJPY stands up  0.87% on the session, having risen back above the 156 handle, where it has been consolidating across the European morning. USD/JPY's intraday bounce has been solid and one-directional, however the pair remains lower on the week, and just over 100 pips off the opening levels printed Monday. JPY is the poorest performer in G10.
  • NZD trades well, higher against most others to keep NZD/USD within range of the cycle highs and notable resistance at 0.6198. Clearance here would put the pair at the best levels since mid-March. Moves follow the firmer-than-expected print for China's Caixin Services PMI for May (54.0 vs. 52.5), which proved more market-moving relative to the mixed Italian / Spanish services PMIs released this morning.
  • The Bank of Canada rate decision set for later today is expected to see the first cut of the cycle, with consensus looking for a 25bps cut to 4.75%. That said, a sizeable minority see the Bank holding until July (or later), leaving markets ~80% priced for a cut today. Those that see a July, rather than a June, cut cite Fed re-pricing, the dangers of US-CA rate differentials and the still-booming local housing market.
  • Outside of the BoC, ADP Employment Change is set to cross ahead of the ISM services index data for May. Both figures will be carefully watched ahead of Friday's Nonfarm Payrolls release, at which markets expect 185,000 jobs added over the month.