Dollar is mildly higher in early US session after ADP report showed 55k expansion in the private job market in May, basically inline with expectation. Prior month's figure was revised up from 32k to 65k. While the data was solid, it doesn't support the view of an exceptionally strong Non-farm payroll figure for tomorrow. Markets are expecting around 500k expansion to be shown by NFP, including around 400k workers hired temporarily to conduct the 2010 Census. Other data released from US saw initial jobless claim remains elevated at 453k. Non-farm productivity was revised lower to 2.8% in Q1 with unit labor cost dropped -1.3%.

Other data released today saw Eurozone retail sales dropped sharply by -1.2% mom, -1.5% yoy in April. Eurozone services PMI was revised slightly up to 56.2 in May. UK services PMI rose less than expected to 55.4 in May. Nationwide house price rose 0.5% mom, 9.8% yoy in May. Australia trade balance unexpectedly showed AUD 134m surplus in April.

ECB's figures showed that Eurozone banks placed a record EUR 316.4b in the central banks' overnight deposit facilities. The amount exceeds even levels seen after collapse of Lehman Brothers back in 2008. The data highlights that while excess liquidity was demanded by banks in recent weeks, they have nowhere else to place. Libors are also climbing which shows banks are getting more reluctant to lend to each other. On the other hand, Libor for three month loan in Swiss francs fell to a record low of 0.083% yesterday. Analysts said that the development might sparking inflation and force SNB to eventually let Swiss Franc appreciate.

Yen crosses are generally higher this week, as boosted by stock's rebound as well as political developments in Japan. CAD/JPY is one of the strongest pair additionally supported by BoC's rate hike and is up 3% this week. While the rebound from 82.38 was strong, there is no change in the view that recent price actions were just part of consolidations that started at 82.23. More rise might be seen but we'd expect strong resistance below 92.51 to limit upside and bring finally bring extend of the fall fro 94.46 high. A break below 85.80 support will be an early alert of fall resumption and flip bias back to the downside.

USD/JPY Mid-Day Outlook

Daily Pivots: (S1) 91.22; (P) 91.79; (R1) 92.68;

USD/JPY's rise is still in progress and edges higher to 92.79 in early US session. Intraday bias remains on the upside and further rally might be seen. But after all, as price actions from 88.25 are viewed as consolidative in nature, we'd expect upside to be limited below 93.62 resistance and bring another fall. On the downside, below 92.03 minor support will turn intraday bias neutral first. Further break of 90.53 support will indicate that rebound from 88.97 is completed and will bring retest of 88.13/97 support zone.

In the bigger picture, considering that USD/JPY failed to sustained above 55 weeks EMA and dropped sharply, we're now slightly favoring the case that down trend from 124.13 is not over. Break of 88.13 support will indicate that rebound from 84.81 has completed with three waves up to 94.97 already. The corrective structure will affirm the bearish case and pave the way to a new low below 84.81. On the upside, however, break of 94.97 will revive the case that 84.81 is already the long term bottom and will target 101.43/65 medium term resistance zone for confirming this bullish case.

Economic Indicators Update

GMT Ccy Events Actual Consensus Previous Revised 23:50 JPY Capital Spending Q1 -11.50% -9.60% -17.30% 01:30 AUD Trade Balance (AUD) Apr 134M -800M -2082M 06:00 GBP Nationwide House Prices s.a. M/M May 0.50% 0.30% 1.00% 1.10% 06:00 GBP Nationwide House Prices n.s.a. Y/Y May 9.80% 9.60% 10.50% 07:55 EUR German PMI Services May F 54.8 53.7 53.7 08:00 EUR Eurozone PMI Services May F 56.2 56 56 08:30 GBP PMI Services May 55.4 55.6 55.3 09:00 EUR Eurozone Retail Sales M/M Apr -1.20% 0.10% 0.00% 0.50% 09:00 EUR Eurozone Retail Sales Y/Y Apr -1.50% -0.10% -0.10% 1.30% 12:15 USD ADP Employment Change May 55K 55K 32K 12:30 USD Non-Farm Productivity Q1 F 2.80% 3.60% 3.60% 12:30 USD Unit Labor Costs Q1 F -1.30% -1.70% -1.60% 12:30 USD Initial Jobless Claims 453K 450K 460K 14:00 USD ISM Non-Manufacutring Composite May 55.8 55.4 14:00 USD Factory Orders Apr 1.50% 1.30% 15:00 USD Crude Oil Inventories -0.4M 2.4M 15:15 USD Fed Chairman Ben Bernanke Speaks in Detroit Michigan -- -- 16:15 USD Fed's Eric Rosengren Speaks in Springfield Massachusetts -- -- 17:15 USD Fed's Thomas Hoenig Speaks in Bartlesville Oklahoma -- --