- China's move to buy more US farm products boosted global risk sentiment.
- Fading safe-haven demand undermined the JPY and remained supportive.
- Bullish traders further took cues from recovering US bond yields/USD uptick.
The USD/JPY pair caught some fresh bids on Wednesday and recovered a major part of the previous session's slide to just over two-week lows.
The pair on Tuesday failed to capitalize on its early uptick back closer to 100-day SMA barrier and turned lower for the fourth consecutive session. The initial leg of the intraday downtick was led by a modest intraday US Dollar pullback, further fueled by the disappointing release of the Conference Board's US Consumer Confidence Index.
Renewed trade optimism remained supportive
The greenback lost some additional ground on reports that an impeachment inquiry will be started against US President Donald Trump. This coupled with Trump's angry rhetoric on China signalled worsening US-China trade relations, which boosted the Japanese Yen's safe-haven status and exerted some additional pressure on the major.
The momentarily slipped below the 107.00 round-figure mark, though managed to regain positive traction during the Asian session on Wednesday following reports that China is planning to buy more US farm products as a goodwill gesture ahead of the upcoming high-level trade talks in early-October.
This comes on the back of the recent move by the US to exempt $250 billion worth of Chinese goods from a 25% tariff and boosted investors' appetite for riskier assets. Fading safe-haven was further reinforced by a pickup in the US Treasury bond yields, which extended some support to the USD and remained supportive of the uptick.
It will now be interesting to see if the pair is able to capitalize on the positive momentum or once again runs out of the steam at higher levels amid absent relevant market moving economic releases from the US, albeit scheduled speeches by influential FOMC member might produce some short-term trading opportunities.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD jumps above 0.6500 after hot Australian CPI data
AUD/USD extended gains and recaptured 0.6500 in Asian trading, following the release of hotter-than-expected Australian inflation data. The Australian CPI rose 1% in QoQ in Q1 against 0.8% forecast, providing extra legs to the Australian Dollar upside.
USD/JPY hangs near 34-year high at 154.88 as intervention risks loom
USD/JPY is sitting at a multi-decade high of 154.88 reached on Tuesday. Traders refrain from placing fresh bets on the pair as Japan's FX intervention risks loom. Broad US Dollar weakness also caps the upside in the major. US Durable Goods data are next on tap.
Gold price cautious despite weaker US Dollar and falling US yields
Gold retreats modestly after failing to sustain gains despite fall in US Treasury yields, weaker US Dollar. XAU/USD struggles to capitalize following release of weaker-than-expected S&P Global PMIs, fueling speculation about potential Fed rate cuts.
Crypto community reacts as BRICS considers launching stablecoin for international trade settlement
BRICS is intensifying efforts to reduce its reliance on the US dollar after plans for its stablecoin effort surfaced online on Tuesday. Most people expect the stablecoin to be backed by gold, considering BRICS nations have been accumulating large holdings of the commodity.
US versus the Eurozone: Inflation divergence causes monetary desynchronization
Historically there is a very close correlation between changes in US Treasury yields and German Bund yields. This is relevant at the current juncture, considering that the recent hawkish twist in the tone of the Fed might continue to push US long-term interest rates higher and put upward pressure on bond yields in the Eurozone.