Yen Volatile Post Asia Close On Monday, But Finds Selling Interest Above 139.00

USD/JPY found support around the 138.00 level late in the Asia Pac session yesterday. From there we spiked to 139.40, before pulling back to 138.60/70. We sit around this level in early trade today. While volatile post the Asia close, this left JPY little changed versus NY closing levels on Friday.

• The rebound in USD/JPY was aided by the better than expected US Empire Manufacturing print (1.1, versus -3.5 forecast), but US yields still slipped for Monday as whole. The US 2yr down 2bps to 4.74%, which helped capped upside in USD/JPY.
• In terms of technicals, the focus still remains on the downside. The recent sell-off has resulted in a break of both the 20- and 50-day EMAs and price is back inside the bull channel drawn from the Jan 16 low. A continuation lower would open 136.57, the lower band of a moving average envelope.
• Japan markets return today from yesterday's break. On the data front we have the tertiary activity index for May on tap later (market consensus is for a gain of 0.4%, versus 1.2% prior).
• Local opinion polls show support for PM Kishida's cabinet is waning and close to historical lows. Problems with the national ID card and release of treated Fukushima water were cited as concerns by voters polled over the weekend.