USD/JPY hits six-month high of 109.70
|- USD/JPY is gaining altitude, possibly tracking the uptick in the S&P 500 futures.
- The risk sentiment is buoyed likely due to the absence of retaliation by China.
- Upbeat China PMIs could be weighing over the anti-risk Japanese Yen.
The anti-risk JPY is again losing ground, possibly tracking the uptick in the US equity index futures.
The USD/JPY is currently trading at 109.70, the highest level since May 30, and the S&P 500 futures are reporting a 0.30% rise.
Last week, President Trump signed the Hong Kong Democracy Bill. The move was criticized by China as interference into its internal matters and Beijing warned of retaliation.
So far, however, China has not announced any retaliatory move and that is likely helping the risk assets stay bid.
Further, the data released over the weekend showed China's manufacturing sector unexpectedly expanded in November. The purchasing managers' index (PMI) for China's manufacturing sector ticked higher to 50.2 in November from 49.3 in October. A reading above 50 indicates expansion.
Looking forward, the early signs of a turnaround in the world's second-largest economy favor further upside in the risk assets and the USD/JPY pair. The Caixin China manufacturing PMI, which focuses on the small and medium-sized export-oriented units, printed above the estimate of 51.5 soon before press time.
The bullish momentum, however, may weaken if the focus shifts to the negative news flow on the US-Chin trade front. Reports hit the wires earlier today that the optimism about the phase-one deal is premature.
Technical levels
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