USD/JPY holds firm despite an overhang off exporter offers. The presence of Japanese names on the topside has limited gains but sentiment is firmly on 117.50-117.65 resistance. Momentum accounts and model funds increased their interest once 116.80/85 gave way in the European morning and there has been a marked pick up in leverage account activity.
According to sources some of the names that sold in the recent downturn have been turning positions. The market is less exposed to short JPY and global risk premiums have reduced, which is encouraging for further gains. Larger real money names have been less active, although there has been good Japanese retail investor flows and we anticipate further offshore demand if the US employment picture is favourable.
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