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USD/JPY struggles to keep 106.00 even as Nikkei 225 flashes mild gains

  • USD/JPY eases from intraday top of 106.16 amid mixed clues.
  • Politico’s signal that Iran is plotting to kill US Ambassador joins risk-negative news from New Zealand to weigh on market sentiment.
  • Vaccine hopes, TikTok story and Brexit confuse traders during the light-calendar morning.
  • Japan’s Industrial Production in the spotlight for now, risk factors remain as the key.

USD/JPY retraces gains to 106.13 as traders in Tokyo capitalize on the early-Monday move. The yen major marked losses during the last week but portrays sluggish moves off-late. The reason could be traced from non-uniform risk signals and a lack of major data/events.

Vaccine news confronts virus woes…

Not only AstraZeneca’s restart of the coronavirus (COVID-19) trials but news that Pfizer is also pitching for its vaccine sale before the year-end added to the market optimism during the week’s start.

Even so, New Zealand’s extension of lockdown restrictions, at least till September 21, with stricter conditions in Auckland, challenges the market’s mood. Also on the negative side could be Politico’s piece suggesting Iran’s planning to take revenge for Qassem Soleimani.

It should, additionally, be noted that the fears of a hard Brexit grow as the UK offers discounts to Japanese while talking trade, in terms of accepting stiff rules, ahead of British diplomats’ visit to Brussels.

Earlier during the day, Japanese Chief Secretary and front-runner for the country’s leadership race Yoshihide Suga said that there is no limit to the bonds a government can issue. This strengthens the odds of further easy money policy in Japan.

Talking about the data, Japan’s Reuters Tankan details suggest the Manufacturing gauge recovered from -33 to -29 in September, the best in six-months. On the other hand, the Services index also bounced off -23 to -18 during the reported period.

Against this backdrop, S&P 500 Futures rise 0.90% while Japan’s Nikkei 225 add 0.50% by the press time. Though, the US 10-year treasury yields struggle around 0.66% as we write.

Moving on, Japan’s July month Industrial Production, expected to remain unchanged at -16.1%, can offer an immediate market reaction. However, traders may pay a little more attention to the risk news for further direction.

Technical analysis

A 30-pip area between 21-day and 50-day SMA below 106.30 keeps the pair’s short-term moves confined.


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