USD/JPY reverts to 109.00 despite dismal Japanese service sector data

• USD/JPY has shed 18 pips, possibly tracking the weak tone in the US index futures. 
• The 10-year Treasury yield is also reporting a two basis point drop. 
• Japan's service sector contracted for the first time in three years. 

USD/JPY is feeling the pull of gravity, despite the weak Japanese macro data.

The currency pair is currently trading at 109.04, having hit a low of 109.00 a few minutes before press time.

The final Jibun Bank Japan Services Purchasing Managers' Index (PMI) came in at 49.7 in October from 52.8 in September on a seasonally-adjusted basis. The below-50 reading is the first since September 2016 and highlight contraction in the service sector.

The weak data validated Bank of Japan's easing bias, but even so, the pair found offers around 109.20 and has fallen back to near 109.00, possibly due to the decline in the S&P 500 futures. As of writing, the index futures are reporting a 0.15% drop.

Further, the minutes of BOJ's September rate review released earlier today highlighted the rift between the board members on the next move, possibly adding to the bid tone around the Yen. Notably, members debated the feasibility of ramping up stimulus with many stressing the need for a comprehensive examination on the chance that additional stimulus will hurt financial institutions' profitability and drive excessive risk-taking.

Looking forward, the pair will likely continue taking cues from the action in the equities and Treasury yields. Currently, the 10-year yield is trading at 1.84%, representing a two basis point drop from the session high of 1.86%.

Technical levels