An unexpected 10k drop in U.S. jobless claims has rekindled the USD/JPY uptrend nL1N21M0E4 that was dented overnight by euro zone growth concerns, but it may take more decent jobs news tomorrow and signs of progress from U.S.-China trade talks nS0N20Z00B to clear 2019's 112.13 high.
Wednesday's disappointing ADP and services ISM data nL1N21L0HG created some doubts about a quick rebound from sluggish winter data, but unexpectedly strong Chinese data this week and the Fed-led central banking shift away from tightening are feeding broad reflation trades funded with cheap yen.
Strong Japanese demand for foreign bonds, mainly Treasuries, is also a factor.
Given the 2.55 percent 10-year Treasury-JGB yield spread versus the current 3bp Bund-JGB spread, Treasuries remain attractive, despite that spread's nearly half a percent drop since November.
The weak 129k March ADP reading has likely lowered market expectations for non-farm payrolls, so the expected rebound from the sad 20k February rise would probably have to be well below the 175-80k expected to derail USD/JPY's rise.
And as Fed's Williams noted today, with the jobless rate at 3.8 percent and inflation near 2 percent, slower GDP growth should be expected, not seen as a recession threat.