Non-farm payroll report came in with two surprises. Firstly, May's contraction in the job market was much less serve that expected at -345k only versus consensus of -530k. That was indeed the least contraction since last September which further suggests that recession in US is abating. However, employment rate jumped more than expected from 8.9% versus expectation of 9.2%, highest level since 1983. Dollar's reaction to NFP was muted and it is indeed yen's weakness that catches most attention. The Japanese yen dives across the board, following surge in Treasury yield which 10 yield on 10 year T-bond spikes higher to as much as 3.905% from yesterday's close of 3.716%.

The greenback manages to recover grounds after initial knee jerk reactions. Indeed, USD/JPY surges through 97.25 resistance. Based on current development, the USD/JPY might extend further rally to 100 psychological level next. Also, dollar index's rebound is still in progress as as mentioned before, a break above 81.13 resistance will add much credence to the case the dollar index has indeed bottomed out at 78.33. A break of 79.03 is needed to indicate that rebound from there has completed. Otherwise, further upside is in favor.

Elsewhere, Canadian job report showed larger than expected contraction by -41.8k in May with unemployment rate rising more than expected from 8.3% to 8.4% in May. UK PPI input came in at 0.4% mom, -9.4% yoy, output at 0.3% mom, -0.3% yoy in May. Swiss CPI rose 0.2% mom, dropped -1.0% yoy in May.

USD/JPY Mid-Day Outlook

USD/JPY's strong rally in early US session an break of 97.25 resistance indicates that the pair has indeed bottomed out at 93.84 and rise from there has resumed. At this point, intraday bias remains on the upside as long as 96.97 minor support holds and further rally should be seen towards 99.71 resistance next. On the downside, below 96.97 will bring pull back but downside should be contained above 95.33 support and bring rally resumption.

In the bigger picture, the strong rally today indicates that whole decline from 101.43 has completed. Note that 100% projection 101.43 to 95.61 from 99.71 at 93.89 and the three wave structure indicates that such fall is corrective in nature. Price actions from 99.67 is possibly developing into triangle consolidation only and hence, upside might be limited below 101.43 high initially and bring another fall. But after all, based on current development rise from 87.12 will likely resume after completing the consolidation.

Economic Indicators Update

GMT Ccy Events Actual Consensus Previous Revised
07:15CHFCPI M/M May0.20%0.20%0.90%
07:15CHFCPI Y/Y May-1.00%-0.90%-0.30%
08:30GBPPPI Input M/M May0.40%0.70%-1.00%-1.70%
08:30GBPPPI Input Y/Y May-9.40%-8.30%-5.00%-5.80%
08:30GBPPPI Output M/M May0.40%0.40%0.60%0.70%
08:30GBPPPI Output Y/Y May-0.30%-0.40%1.20%1.30%
08:30GBPPPI Output Core Y/Y May1.20%1.20%2.40%2.50%
11:00CADNet Change in Employment May-41.8K-36.4K35.9K
11:00CADUnemployment Rate May8.40%8.30%8.00%
12:30USDChange in Non-Farm Payrolls May-345K-530K-539K-504K
12:30USDUnemployment Rate May9.40%9.20%8.90%
12:30USDAverage Hourly Earnings M/M May0.10%0.20%0.10%