Much stronger than expected job data from US boosts investors sentiments and send the Japanese lower in early US session. ADP employment report showed the US private sector cut only -491k jobs in Apr, much less than expectations of -643K and prior months' downwardly revised -708k. According to Challenger report, announced job cuts in Apr eased by -11.8%, from more than 150k to 132.5k in Apr sending the yoy change down from 180.7% to 47.3%. The data today, together with strong rebound in employment components of both ISM indices, raise hope that the Non-Farm Payroll report on Friday will post some pleasant surprise.

Investors sentiments was negative earlier today following rumors that BofA is the most under-capitalized among the 19 largest bank in US and would be required by the government to raise $34b in new capital after the stress test. The figure is more than triples of any previously published reports about BofA's capital needs and is around half of its market cap. Markets are also concerned that uncertainty over banks won't end after the stress test results. Nevertheless, sentiments has 180 degrees turn after the job data.

In the Eurozone, retail sales plunged -0.6% mom in March, worse than market expectation of +0.1% and -0.3% in February, as rising unemployment constrained disposable income. On yearly basis, the decline accelerated to -4.2%, compared with consensus of -2.6% and -4% in February. Services PMI in April, on the other hand, was revised slightly upward to 43.8 from 43.1 while the gauge for Germany was revised up to 43.8 from initial reading of 43.5. In the UK, services PMI improved to 48.7 in April, better than analysts' forecast of 46.2 and 45.5 a month ago.

Australia's retail sales rose +2.2% mom in March , better than market expectation of +0.5% and -2% a month ago. Trade surplus also widened to AUD 2498M in March from a downwardly revised AUS 1752M in the previous month as decline in imports was faster than that in exports.

USD/JPY Mid-Day Outlook

Daily Pivots: (S1) 98.54; (P) 98.87; (R1) 99.14

USD/JPY rebounds strongly after dipping to 97.93 earlier today and turns intraday outlook neutral again. On the upside, above 99.2 suggests that pull back from 99.57 has likely completed totally and rise from 95.61 is resuming for 101.43 high and above. But after all, note that we'd maintain the view that upside potential is limited as strong resistance should be seen as USD/JPY approaches medium term trend line resistance at 102.27.

On the downside, below 97.93 will flip intraday bias back to the downside for 95.61 support. While it's still early to assess the chance, we'd like to point out that break of 95.61 support will be an important signal that whole rise from 87.12 has completed, probably in form of head and shoulder top (ls: 99.67, h: 101.43, rs: 99.57). In such case short term outlook will be turned bearish.

In the bigger picture, the down trend from 124.13 (07 high) is still intact. This is supported by the fact that USD/JPY is still struggling to take out 55 weeks EMA (now at 99.93 decisively). Bearish divergence condition in daily MACD and RSI are also indicating loss of upside momentum and suggest possibility of reversal. Hence, while further rise to above 101.43 cannot be ruled out, we'd expect strong resistance as USD/JPY approaches medium term trend line resistance at 102.27 and bring reversal. Break of 95.61 support will be an important indication that whole rebound from 87.12 has completed and should bring resumption of the down trend from 124.13 eventually.

However, note that sustained trading above the trend line resistance will argue that whole down trend from 124.13 has indeed completed already and should then put focus back to 110.65 resistance for confirmation.

Economic Indicators Update

23:01GBPU.K. Nationwide Consumer Confidence Apr50424142
01:30AUDAustralia Retail Sales M/M Mar2.20%0.50%-2.00%
01:30AUDAustralia Trade Balance (AUD) Mar2498M1700M2109M1752M
07:55EURGerman PMI Services Apr F43.843.543.5
08:00EUREurozone PMI Services Apr F43.843.143.1
08:30GBPPMI Services Apr48.746.245.5
09:00EUREurozone Retail Sales M/M Mar-0.60%0.10%-0.60%-0.30%
09:00EUREurozone Retail Sales Y/Y Mar-4.20%-2.60%-4.00%
11:30USDU.S. Challenger Job Cuts Y/Y Apr47.00%--180.70%
12:15USDU.S. ADP Employment Change Apr-491K-643K-742K-708K
12:30CADCanada Building Permits M/M Mar23.50%2.50%-15.90%
14:00CADCanada Ivey PMI Apr40.543.2
14:30USDCrude Oil Inventories2.6M4.1M
16:15CHFSNB Chairman Roth Speaks
20:00CADBOC Governor Carney Speaks