USD, JPY, EUR flows: USD firm after ADP, JPY bears the brunt

Slightly stronger than expected ADP employment data has kept the USD on the front foot, but primarily against the JPY, with the riskier currencies bouncing back after an initial dip. US yields are firmer, and USD/JPY is testing the 34 year high at 151.97. Yields are still not high enough to correlate with a break higher, especially with the Japanese authorities warning of the possibility of intervention on a break. But higher yields combined with stable equity markets mean lower equity risk premia and this correlated with a rise in EUR/JPY. It may be that this relationship breaks down if the Japanese authorities get involved, but for now, EUR/JPY (and AUD/JPY, GBP/JPY) are easier to buy than USD/JPY in a risk positive environment as the BoJ threat is less explicit.