USD/JPY: has been mixed on the back of a cautionary set of FOMC minutes, (less hawkish bias)

• USD/JPY has been mixed on the back of the cautionary FOMC minutes saying that policymakers saw intensified risks around trade policy.
• "Sentiment is set to remain dominant as market participants look to the U.S.-China trade dispute and its anticipated escalation scheduled for Friday." - Scotiabank

USD/JPY has been mixed on the back of the June FOMC minutes where importantly, they came with the statement that gradual hikes needed amid very strong economy though. Currently, USD/JPY is trading at 110.67.

Key take away statements from June minutes:

• Some officials: running economy to hot risks economic downturn.
• Saw fiscal policy supporting economic growth.
• Price moves support outlook for 2% inflation.
• Broad support for gradual rate hikes.
• A few beneficial saw US fiscal policy as upside risk.
• Many business contacts concerned by risks from a trade war.
• So downside risks from emerging markets, Europe.
• Important to watch yield curve slop.

USD/JPY has managed to bounce back from the recent lows of 110.28 where bears have attempted a downside break out on three occasions this month so far and scored a high of 110.70 earlier today in London in an environment of mild risk appetite, weighing on the yen. There was some downside in NY as stocks tanked on the open, although recovered and have been buoyed by hopes that the U.S. and its European counterparts could move to ease trade tensions, (Technology shares and automakers  were among the biggest gainers, (after a U.S. official reportedly offered a “zero solution” to car tariffs)).

However, trade tensions are not going to go away while as soon as tomorrow, the U.S. plans to impose $34 billion worth of duties on Chinese products. It was also reported yesterday by Reuters that Beijing is expected to implement its own retaliatory tariffs the same day. Such uncertainties could cap the bullish attempts on the 111 handle while the JPY’s risk safe haven profile leaves it vulnerable to knee-jerk in periods of risk aversion.

US data:

• US: Private sector employment increased by 177K jobs in June vs. 190K expected - ADP

Elsewhere, the ADP report weighed on the greenback earlier and Services ISM was also a key release along with the ISM non-manufacturing. The ADP report showed that the US private sector added 177K new jobs during the month of June. The headline reading fell short of consensus estimates, pointing to an addition of 190K new jobs, and also worse than the previous month's figure of 178K. The US final June Markit services PMI came in at 56.5 vs 56.5 expected while the June ISM non-manufacturing arrived at 59.1 vs 58.3 expected. All eyes now turn to the nonfarm payrolls tomorrow. 

• US: Private sector employment increased by 177K jobs in June vs. 190K expected - ADP

USD/JPY levels

USD/JPY is holding above the 200-D SMA at 110.14, the Tenkan prop is located a cent lower at 109.19 that falls below the 109.36 key June support. 108.10 is the May 29 low. If the pair is to break higher, an unlikely scenario given the dovish tilt to these minutes, then May's 111.39 high is in sight but comes as a very congested area where the 161.8% of May low & 76.4% of the May drop was located. On the wide, the 112.30's, (Fibos at 112.22/33) remain key upside target.