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  • USD/JPY fades recovery moves while trying to keep Friday’s mild gains.
  • Brexit pessimism fans risk-off, US-China tussle, cautious move ahead of Japanese PM election offer background music.
  • US off can restrict market moves amid a light calendar in Asia, Japan’s Leading Economic Index eyed.

USD/JPY seesaws around 106.30 amid the initial hour of Tokyo open on Monday. In doing so, the yen pair struggles to keep the late Friday’s pullback from 106.17 but the sluggish performance of global equities and off in the US question the pair’s moves.

Brexit, PM election and Sino-American tension in focus…

During the weekend, UK PM Boris Johnson mentioned having a trade deal with the European Union (EU) before October 15. Also suggesting hardships for Brexit talks are the headlines from the Financial Times suggesting the British aim to change the departure agreement. While the news has initially irritated the EU members, as per the BBC reporter, details on the same are awaited for clear direction.

On the other hand, China tries to smile on the US blacklisting of SMIC but can’t rule out the negative trading sentiment due to the tussle with the world’s largest economy.

Furthermore, policymakers at Japan await a key election, on September 14, after PM Shinzo Abe resigned citing health issues. Chief Cabinet Secretary Yoshihide Suga, leading the race for the national leader, recently said that the government after the election won’t be interim.

Additionally, the coronavirus (COVID-19) woes keep disturbing the global markets despite the upbeat prints of the US employment data for August, published Friday. While the latest figures from Australia and Texas have been normalizing off-late, India and Brazil continue to struggle from the pandemic. In Japan, “A total of 72,203 people have tested positive as of 7:30 PM, Sept. 5, 2020, “said the Kyodo news.

Against this backdrop, Japan’s Nikkei 225 and S&P 500 Futures flash mild losses of 0.10% by the press time.

Given the American holiday and a light calendar, market players may witness a dull start to the week. However, the preliminary readings of Japan’s Leading Economic Index, expected 84.6 versus 84.4 prior, may offer intermediate moves to the pair. It should also be noted that the risk-catalysts have been less active off-late and hence might be received with a cold heart unless flashing any key updates.

Technical analysis

Buyers again attack 50-day SMA, near 106.45, to confront 106.90 level comprising 100-day SMA. Sellers await entries unless the quote breaks an ascending trend line from July 31, at 105.52 now.


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