- US-China trade news boosts the market’s risk tone off-late.
- USD buyers keep the gains following Friday’s employment data, latest comments from Fed’s Daly.
- ISM Non-Manufacturing PMI to decorate economic calendar, trade/Brexit headlines hold importance.
Japanese traders cheer the increasing odds of a successful trade deal between the US and China while returning from an extended holiday. With this, the USD/JPY pair takes the bids to 108.75 by the press time of Tokyo open on Tuesday.
Not only trade-positive comments from the US and Chinese diplomats, the United States’ (US) administration’s consideration to remove some existing tariffs on Chinese goods, as per the Financial Times, seems to boost the recent risk-on sentiment.
As a result, the US 10-year Treasury yields extend the previous run-up to 1.8% while Japan’s NIKKEI kicked off 1.5% high at the start of Tuesday’s trading.
Also adding to the pair’s strength is the market’s support to the US Dollar (USD) after Friday’s more than expected Nonfarm Payrolls that ward off Monday’s downbeat Factory Orders. Furthering the greenback gains could be the latest comments from the San Francisco Fed’s Mary C Daly who turned down the scope of the US recession.
Investors will now concentrate more on the United States (US) ISM Non-Manufacturing PMI as well as Markit Services PMI for October. Additionally, the US JOLTS Job Openings and Trade balance numbers for September also beef up the data line. “The US data focus is the Oct non-manufacturing ISM survey. The consensus is for an improvement in the overall index from 52.6 (a low since 2016) to 53.4. The US Sep trade balance is also due, expected around -$53bn,” says Westpac in its latest report.
Other than Purchasing Managers Index (PMI) data and trade balance, Brexit/trade headlines will keep the momentum traders happy while going forward.
Technical Analysis
Unless clearing 109.28/32 area, comprising highs marked in October and August, the importance of an upward sloping trend line since late-August, at 108.13, can’t be ruled out.
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