Yen Loses Ground, USD/JPY Flirts With Weekly Gain

The yen gave back its initial gains and retreated, extending gains after the Tokyo fix, amid a positive showing from the equity space. Both regional benchmarks and U.S. e-minis crept higher despite a mixed Thursday session on Wall Street.

• The rebound in USD/JPY may have been facilitated by a degree of widening in U.S./Japan yield spread. Risk reversal held steady after soaring to multi-week highs on Thursday. A large ($1.5bn) option expiry at Y134.00 for today's NY cut may render this level magnetic.
• Sterling traded on a slightly softer footing, likely due to regional reaction to the BoE's commentary that came alongside yesterday's rate decision. Gov Bailey outlined a downbeat assessment of the economy and said GBP decline is "not a crisis."
• The greenback outperformed at the margin, with the BBDXY index moving away from yesterday's lows, with participants preparing for a key jobs market report out of the U.S.
• While U.S. NFP report will steal the limelight later in the day, its Canadian equivalent as well as German industrial output data and comments from Fed's Barkin & BoE's Pill are also due.