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  • USD/JPY stays on the front foot near the intraday high of 105.59, defies Friday’s downbeat performance.
  • Japan’s Jibun Bank Services PMI rises beyond 45.6 forecast to 46.9 in September.
  • US President Trump recovers from the virus infection, hopes of stimulus, soft Brexit gain momentum.
  • Virus and aid package updates from America become the key amid a light calendar, off in China.

USD/JPY rises to 105.55, up 0.22% on a day, amid the initial hour of Monday’s Tokyo open. The pair recently gained from an uptick in the final reading of September month’s Jibun Bank Services PMI for Japan. Though, improving conditions of US President Donald Trump, after Friday’s coronavirus (COVID-19) infection, becomes the key reason for the risk barometer’s latest upside. Also on the positive side could be expectations of an aid package from America and Tokyo, as well as hopes that Britain will have a trade deal with the European Union (EU) before it officially leaves the bloc by the end of 2020.

Trump’s recovery matters the most…

In his latest video tweet, US President Trump sound mostly energetic and visited crows, in a short-drive with a mask, outside Walter Reed afterward. News also crossed wires, via Reuters, suggesting the Republican leaders’ talks with Treasury Secretary Steve Mnuchin about the COVID-19 stimulus. US House Speaker Nancy Pelosi and Majority Leader Mitch McConnell also sound optimistic for the much-awaited stimulus and added to the risk-on mood.

Furthermore, news that UK PM Boris Johnson and EU Commission President Ursula von der Leyen met and approved an extra month of talks during the weekend, despite “significant gaps” in the last scheduled round of negotiations, also offered a boost to the market optimism.

As a result, Japan’s Nikkei 225 gains 1.35% while S&P 500 Futures also add 0.75% to the kitty. Further to portray the positive mood, the US 10-year Treasury yields also rose 1.5 basis points (bps) to 0.709% as we write.

It should also be noted that chatters concerning Japan’s COVID-19 stimulus and vaccine hopes are battling with the fresh risk of lockdowns in the UK and Europe.

Moving on, off in China and an absence of major data/events from elsewhere increases the importance of the US President’s health updates for near-term market direction. Though, ISM Services PMI for September, expected 56.00, will be the key to watch during the US session.

Technical analysis

Unless crossing the 50-day SMA level of 105.75 on a daily closing basis, USD/JPY bulls will remain cautious.