USD/JPY Retreats As Weaker US Data Weighs On Yields

USD/JPY dipped sharply through US trade on Tuesday. From highs near 133.20 we pulled all the way back to the 131.50/55 region. We sit slightly higher now (last around 131.70/75, close to NY closing levels). This left yen gains just under 0.6% for Tuesday's session. Once again weaker US data (this time JOLTS jobs data) weighed heavily on US yields. The US 2yr back to late March levels at 3.825%.

• In the 10-yr swap space, the US-JP differential continues to trend lower, now back to +237bps.
• A former Finance Ministry Official (Takehiko Nakao) stated yesterday the BoJ, under new Governor Ueda, should review its YCC framework. He stated it has caused side effects in terms of distorting the bond market, weakened the FX rate and weighed on fiscal discipline.
• On the data front today, the final March PMI readings are due for PMI services (prior 54.2) and the composite (prior 51.9) indices.
• From a technical standpoint, the focus still remains on the downside in USD/JPY. The March 29 low of 130.76 is a support point, while the low from the 24th, 129.64 is also eyed, with this level also being a bear trigger. A concerted break back above the 50-day EMA (~133.30) is needed to re-establish more bullish momentum.