JPY: Yen Lags Broader USD Weakness, Labor Earnings Toda

USD/JPY tracks near 154.30/35 in early Wednesday dealings. The yen gained around 0.30% for Tuesday's session, which trailed softer USD index moves. The DXY fell nearly 1%, the BBDXY index off 0.70%. Broader equity sentiment was mostly positive in global markets which aided risk appetite in the FX space. 

• For USD/JPY technicals, we continue to remain within recent ranges. The Jan 27 low is at 153.72 as a downside watch point. On the topside, the 20-day EMA is at 155.72, while the Jan 23 high at 156.75, is likely more important topside resistance.
• USD/JPY was holding above 155.00 before the US session unfolded. Weaker US data helped pull the pair sub 154.50. We had focus on the weaker JOLTs jobs data, which comes ahead of the ADP tonight, followed by the NFP at the end of the week.
• US yields are around 3-5bps lower across the Tsy benchmarks, with US-JP yield differentials turning lower. The 10yr spread is threatening the +320bps level on the downside, levels last seen in the first half of Dec last year.
• Broader USD sentiment was weighed by optimism around surrounding trade/tariff negotiations, which boosted equities (SPX up 0.72%), supporting risk sensitive currencies in tandem.
• On the data front today we have Dec labor cash earnings data. Real earnings are forecast to stay negative, albeit just. We also get the final PMI readings for January. In the option expiry space note the following for NY cut later: Y153.15-25($2.0bln).
• Finally, BBG quote a former BoJ official stating the terminal rate for this cycle will be 1.5%, with the hike likely in July. (see this link).