The US Dollar (USD) recovered overnight after a brief dip on weaker ADP jobs data, with USD/JPY leading gains toward the key 155 resistance. Buying around the Tokyo fix and ongoing investment inflows into the US are keeping the pair supported, even as Japanese officials step up verbal warnings. Markets see real intervention as unlikely before USD/JPY reaches 160, ING's FX analyst Chris Turner notes.

Investments into US seen supporting USD/JPY

"As to core markets, mixed seems an appropriate description. The dollar was briefly hit yesterday after private sector payroll firm, ADP, suggested that 11k jobs had been lost per week through October. This report used a different methodology from its recent release, showing +42k jobs created that same month. Yet the dollar did not stay offered for long and has come back a little bid overnight."

"Here, USD/JPY is leading the charge, where buying the Tokyo fix was being blamed for the move. One factor thought to be keeping USD/JPY supported is direct investment into the US. These potential flows have brought USD/JPY to psychological resistance at 155, where Japanese verbal intervention is picking up."

"However, few will want to sell USD/JPY at 155, fearing that it could easily run to 160 in thinning year-end markets and that physical intervention to sell USD/JPY probably won't come before that 160 level."