USD/JPY clings to gains near session tops, around 108.70 post-US data

• The incoming positive trade-related headlines weighed on the JPY’s safe-haven status.
• Rallying US bond yields, albeit failed to revive the USD demand, remained supportive.
• Mixed US monthly retail sales figures did little to impress or provide any fresh boost.

The USD/JPY pair maintained its strong bid tone near session tops and had a rather muted reaction to the mixed US economic data.
 
The pair stalled its recent pullback from multi-month tops – levels beyond the very important 200-day SMA – and gains some positive traction on the last trading day of the week amid the incoming positive trade-related headlines.

Trade developments remain in focus

The latest comments by the US commerce secretary Wilbur Ross added to the overnight optimism led by White House economic adviser Larry Kudlow and further raised hopes for a breakthrough in the US-China trade talks.
 
Both Kudlow and Ross indicated that they are close to securing a trade deal with China, which boosted the global risk sentiment and weighed heavily on perceived safe-haven currencies – including the Japanese yen.
 
The risk-on mood was further reinforced by a strong intraday pickup in the US Treasury bond yields, which remained supportive of the pair’s goodish intraday positive move, albeit failed to revive the US Dollar demand.

Meanwhile, the pair moved little and held steady near the 108.70-75 region following the release of US macro data, showing that headline retail sales recorded a growth of 0.3% as compared to 0.2% rise anticipated.
 
The positive reading, to a larger extent, was negated by a slight disappointment from core figures and an unexpected fall in the Empire State Manufacturing Index and thus, did little to provide any meaningful impetus.
 
It will now be interesting to see if bulls are able to maintain their dominant position or the uptick falters near the 109.00 handle (200-DMA), which should now act as a key pivotal point for the pair’s next leg of a directional move.

Technical levels to watch