JPY headed lower against both USD and the crosses despite on-going speculation of a BoJ interest rate hike on December 19. Higher US yields on fading expectations of a Fed ease early next year and talk of increasing bids on the 114-handle pushed up USD/JPY. A larger-than-expected downward revision to Japan Q3 GDP and weaker than expected machinery orders data for October helped keep the pair bid.
Stops at 115.40 were taken out and the pair extended through 115.60 offers to record a 115.68 high. EUR/JPY also traded on a firmer footing in tandem with USD/JPY's move up to 115.60. The pair cleared 153.50 offers and extended to 153.67. The move lower in the JPY surprised a few players, with conditions largely quiet and with little going through. Some sources highlighted a BBC news story confirming a leak at a nuclear reactor in Japan, which may have contributed to the heavier JPY tone.
No one really expects the dollar to surge unless the US NFP report proves to be much larger than the +110K seen by most. Even then, good offering interest is likely to return towards and just above 116.00.
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