USD/JPY Extends Gains Amid Holiday-Thinned Liquidity

There is renewed buying interest in USD/JPY after a better than expected jobs report released out of the U.S. pushed the pair higher last Friday. Japanese financial markets are closed today, which means Japanese officials are out on holidays, even as the rate is operating in the territory of heightened intervention risk.

• U.S./Japan yield differentials widened before the weekend. 2-year gap grew 4.8bp on Friday, while 10-year spread rose 6.0bp. Cash trading in JGBs and U.S. Tsys will be closed in today's Tokyo session due to the Japanese holiday.
• Leveraged funds trimmed net JPY short positions by 8,029 contracts to 24,327 in the week through Oct 4. Asset managers reduced net JPY shorts by 3,648 contracts to 67,619.
• North Korean military sabre-rattling continues to draw attention after this weekend's short-range missile test. The nation observes an important anniversary today, which often coincides with major announcements.
• Spot USD/JPY trades +15 pips at Y145.40. From a technical perspective, Sep 22 high/2.764 proj of the Aug 2 - 8 - 11 price swing provide the initial layer of resistance at Y145.90/146.03. Bears look for a retreat towards Sep 22 low of Y140.36.
• This week's data highlights include BoP current account balance & Eco Watchers Survey (Tuesday), as well as core machine orders & flash machine tool orders (Wednesday).