Robust U.S. jobs growth is sending U.S. yields higher across the curve and USD/JPY up toward a cluster of resistance around 109 .
Indeed, the data has seriously tempered expectations the Fed might have to cut rates 50bps this month.
A 50bp cut would be a panic move, and one that would only make sense if resumed U.S.-China trade negotiations begin very badly, reinforcing the global trade-led economic slowdown and sending yen-funded carry traders scurrying.
A 25bp cut would limit the damage to stocks from today's rates rebound as long as there's no bad news on the trade front.
The USD/JPY rebound is working past resistance by large 108.50 expiries and Monday's post-trade truce high at 108.53.
Gains are being checked somewhat by the risk-off response from previously frothy equities that have been feted amid ECB and Fed policy easing shifts.
That "bad news is good news" reaction function is now being tested.
Generally speaking, good U.S. economic data is good for USD/JPY, but more is needed.
With the overhang of IMM spec longs mostly cleared out, there's more scope for USD/JPY gains, but getting past hurdles around 109 may have to wait until there's word from upcoming U.S.-China trade talks.