Following on from my potential trade idea on Monday, USD/JPY is not far off from testing the ¥110.00 mark in the near term after having printed a high of ¥109.85 in overnight trade. The Tankan manufacturing and non-manufacturing index readings were mixed, with the manufacturing component showing an improvement while the non-manufacturing component contracted.
This reading didn’t cause much of a move in the yen as USD/JPY remained on its upward trajectory. On the USD side of the equation we are heading into the business end of the week. The ADP non-farm employment change and manufacturing PMI readings will set the tone for the pair. If we see some strong readings, the greenback would be in a good position to extend its gains. I remain happy holding on to the trade for now.