USD/JPY is on the comeback trail. I wrote earlier that the US dollar moved looked overdone given that front-end yields hadn't even given up the gains from the past two days. Now we've seen yields pare that move and USD/JPY cut today's decline in half.
The pair is still down 70 pips but at 136.77, it's near the 61.8% retracement of the sharp move lower on the data.
Equities have stabilized and some market participants might be re-thinking putting too much weight on one PMI release.
Technically, it's a clear 'go with' on a break above the current highs and a fade if that can't take place. Watch for corroboration from stocks and bonds.
