Dollar is lifted mildly after slightly weaker than expected ADP employment report but remains largely in range. The ADP report showed -169k contraction in the private job market in November, slightly worse than expectation of -148k. Also, this makes the consensus number of -114k of Non-Farm Payroll a bit too optimistic and triggered some worry that there will be disappointment too on Friday. Dollar continues to ignore the persistent strength in gold and is holding above near term low against Euro as well as in the dollar index. But after all, there is no sign of reversal in the greenback yet and markets could just be preparing for another selloff.

The Japanese yen continues to trade with a soft tone on intervention talk. Prime Minister Yukio Hatoyama expressed his concern on recent strength in yen and said it cant' be tolerated. Nevertheless, later in the day, Chief Cabinet Secretary Hirofumi Hirano clarified Hatoyama wasn't indicating government intervention for the moment. BoJ member Miyako Suda said the bank will not rule out any policy options and is open to more measures to support the economy a day after the announcement of extra short-term funding.

Other data released today saw UK PMI construction rose more than expected to 47 in November. Eurozone PPI dropped -6.7% yoy in October but rose 0.2% mom. Challenger report showed -72.3% yoy drop in planned layoffs in US. Fed's Beige Book will be the next release later in US afternoon.

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USD/JPY Mid-Day Outlook

Daily Pivots: (S1) 86.05; (P) 86.79; (R1) 87.42; More.

USD/JPY's recovery from 84.81 might still extend further as long as 86.49 minor support holds. But after all, upside will likely be limited by 38.2% retracement of 92.31 to 84.81 at 87.67 and bring resumption of the whole fall from 92.31. Below 86.49 minor support will flip intraday bias back to the downside first. Further break of 84.81 will target 100% projection of 97.77 to 88.00 from 92.31 at 82.54 next.

In the bigger picture, the strong break of 87.12 support confirmed that whole down trend form 124.13 has resumed and should be target a test of 1995 low of 79.75 next. On the upside, break of 92.31 resistance is needed to be the first sign on bottom, with break of 101.43 resistance as confirmation. Outlook will remain bearish as long as 92.31 holds.

USD/JPY