Risk-on powers USD/JPY to 113.50

• USD/JPY clocked a session high of 113.50 soon before press time and could rise further if both the equities and Treasury yields continue to rise.
• FX desks are offering anti-risk JPY amid risk-on in the US equities.

The USD/JPY pair is currently trading at 113.45 – up 0.15 percent on the day – having clocked a low of 113.20.

Safe havens like the Japanese yen are losing altitude, courtesy of the rising odds of US-China trade deal and the resulting risk-on in the equities.

At press time, major Asian equity indices are flashing green, extending Wednesday’s risk-on rally, as China is reportedly planning to open up its economy to foreign companies. These measures could be rolled out in the first quarter of 2019 and could pave for a permanent trade truce between two of the world’s biggest economies.

As a result, markets may continue to buy risk in the short-term, pushing the anti-risk assets lower across the board. The USD/JPY, in particular, could fly high, having bounced off strongly from the crucial 100-day moving average (MA) support earlier this week, if the improved risk appetite lifts US treasury yields.

Currently, the 10-year US Treasury yield is seen at 2.91 percent – up six basis points from the recent low of 2.85 percent.

USD/JPY Technical Levels