USD/JPY edges higher toward 109 as stocks gain traction

• Wall Street extends gains after opening in the green.
• US Dollar Index clings to daily gains above 96.
• Housing market shows signs of improvement in the U.S.

After staying quiet around the 108.80 area for the last few hours, the USD/JPY pair started to climb and touched its highest level in a week at 108.92. As of writing, the pair was trading a couple of pips below that level, adding 0.22% on the day.

Despite a subdued trade action in the FX space on Wednesday, improved market sentiment in the second half seems to have provided a small boost to the pair. Following a positive start to the day, major equity indexes in the U.S. pushed higher supported by strong earnings figures from big financial institutions and made it difficult for safe-havens to find demand. At the moment, the Dow Jones Industrial Average is up 0.6% on the day.

Meanwhile, today’s data from the U.S. showed that builder confidence in January rose with the NAHB’s Housing Market Index advancing to 58 from 56 in December. Nevertheless, the greenback didn’t show a significant reaction to the data and the US Dollar Index stays in the upper half of its daily range a little above the 96 mark, where it’s adding 0.1% on the day.

Later in the session, the Fed’s Beige Book will be looked upon for fresh impetus.

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