USD/JPY sits at Y107.85, a touch lower...>

DOLLAR-YEN: USD/JPY sits at Y107.85, a touch lower but off its early lows.

- The rate charted a Doji candle yesterday, which indicates market indecision.

Worth highlighting that Japanese markets were shut for a national holiday, which

limited liquidity. A solid round of Chinese macroeconomic data revived risk

appetite somewhat, sending the pair higher in the Asia-Pac session. However,

after topping out at Y108.11 USD/JPY eased off into Europe and proceeded to

trade within a 17 pip range through the rest of the day.

- A fall through the Jul 3 low of Y107.53 would open the key trendline support

at Y107.18. A return above Y108.00 would open the 23.6% retracement of the slide

from Y112.40 to Y106.78 at Y108.11, which kept a lid on yesterday's gains.

- A former BoJ official Hideo Hayakawa told BBG that the central bank would

support the government's stimulus package, which may be announced in October

when the planned sales tax increase is exp. to take effect. According to

Hayakawa, "the BoJ is likely to absorb additional JGB issuance from the gov't."

- Japanese trade balance comes out on Thursday, while national CPI figures will

be released on Friday. Usual BoJ Rinban ops will also provide interest.