USD/JPY looks for firm direction around 109.50, focus on political headlines, month-start data
- USD/JPY seesaws around the multi-month high flashed last week.
- An absence of retaliation from China, receding political optimism in the UK offer mixed signals.
- Activity numbers from Japan and the US can provide fresh impulse while political headlines could keep the driver’s seat.
USD/JPY fails to extend the week-start gap-up as traders await more clues to extend the previous month’s run-up. The pair takes the rounds to 109.55 by the press time of early Monday morning in Asia.
The pair recently benefited from the US dollar’s (USD) broad strength amid rising calls of a trade deal between the United States (US) and China. However, the recent issues over the Hong Kong Human Rights Act seem to trouble the investors as China has shown its intention to retaliate, not targeting the phase-one, but has refrained from any measures.
Elsewhere, political optimism surrounding the United Kingdom (UK) is facing off-late. The reason being the Prime Minister (PM) Boris Johnson-led Tory Party’s receding lead over the opposition Labour Party’s odds of winning the December election. The latest poll from the BMG indicates half the buffer compared to the previous week’s release. Investors seek fresh clues after the UK PM’s recent public appearances have been criticized.
Additionally, the US Federal Reserve (Fed) officials have been holding their neutral bias intact as they enter the blackout period. With this, traders keep guessing as to whether the US central bank will announce any monetary policy tightening measures or not.
As a result, the market’s risk sentiment has been sluggish off-late with the US 10-year treasury yields taking rounds to 1.77% by the press time.
On the economic calendar, month-start Purchasing Manager Index (PMI) numbers from Japan and the US will offer a live market on Monday. Among them, November month readings of Japan’s Jibun Bank Manufacturing PMI and the US ISM Manufacturing PMI will be closely watched. While no change is expected in 48.6 figure of Japan’s activity number, the US PMI could increase to 49.4 from 48.3 prior.
Technical Analysis
Buyers wait for an upside break of November month high, 109.67, to aim for May-end top nearing 110.00 whereas sellers look for prices to go down under 200-day Simple Moving Average (SMA) level of 108.90 to target 50-day SMA near 108.50.