USDJPY - Neutral Pre US Inflation Data

USDJPY has dropped since it's recent highs above 116 on the back of a weaker than anticipated payroll Friday with 199K jobs added in December vs 400K expected. The FED had indicated at last Wednesday's meeting that it would reduce the balance sheet sooner causing yields to rise strengthening the US dollar. This is largely due to the FED's fears of rising inflation therefore we will await inflation data for December on Wednesday. We hold a neutral view whilst the currency pair is below resistance at around 116 as we await further developments including news from the Bank of Japan which indicated it is likely to start tapering it's corporate debt purchases.