USD/JPY ignores upbeat Tokyo CPI to print three-day winning streak past-106.00
|- USD/JPY reverses decline from 106.47 while bouncing off 105.90.
- Tokyo Consumer Price Index grew past-0.4% forecast, 0.3% prior to 0.6% YoY in July.
- Market sentiment stays positive despite policy deadlock in the US, virus woes.
- BOJ Governor Kuroda stays ready to extend the bank’s support further.
USD/JPY remains on the front-foot around 106.15 as markets in Tokyo open for Tuesday’s trading. The yen pair recently shrugged off the July month Tokyo Consumer Price Index (CPI) data while rising for the third consecutive day. In doing so, the quote pays a little heed to the risks emanating from the delay in the US stimulus and the coronavirus (COVID-19) woes.
Tokyo CPI ex-Fresh Food crossed 0.2% expected and previous with 0.4% whereas CPI ex-Food, Energy beat 0.5% market consensus and 0.4% last readings to flash 0.6% in July. Even if the data flashed upbeat signals for the Japanese currency, the USD/JPY prices failed to step back. The reason could be traced from US President Donald Trump’s optimism and broad US dollar strength backed recently by welcome data.
US President Trump defies WHO’s grim words…
In his latest White House press conference, the Republican leader cited hopes of a vaccine before the year ends while turning down the odds of permanent lockdowns. This contradicts warnings from the World Health Organization’s (WHO) Head Dr. Tedros Adhanom Ghebreyesus that there may never be a "silver bullet" to beat COVID-19.
Not only this US President Trump also challenges the opposition Democratic Party’s push for a $3.5 trillion stimulus plan, not to forget the proposal of unemployment claim benefits of $600. The same generates a policy deadlock in the world’s largest economy amid the pandemic’s surge.
Other than the delay in the much-awaited US stimulus, worsening virus conditions in Australia, Japan and some of the notable Asian nations like India also challenge the latest risk-on sentiment.
As a result, S&P 500 Futures refrains from following Wall Street’s gains but Japan’s Nikkei 225 takes the bids near 22,450, up 1.18% on a day, by the press time.
Nikkei’s gains could be traced from the Bank of Japan (BOJ) Governor Haruhiko Kuroda’s readiness to pump the economy further. In the latest appearance, BOJ’s Kuroda said, if needed, may mull extending march 2021 deadline of steps to support corporate funding.
Looking forward, traders may have to dig deeper for the catalysts. In doing so, virus updates and US fiscal news can entertain market players amid a light calendar.
Technical analysis
In addition to 21-day SMA near 106.55, a downward sloping trend line from June 05, around 106.75 also restricts the pair’s short-term upside.
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