USD/JPY: Off intraday high near 104.00 on upbeat Japan Industrial Production, Retail Sales

• USD/JPY trims early-Asian gains, drops for the fifth consecutive day.
• Japan’s October month Retail Sales, Industrial Production prints upbeat results.
• Trading sentiment stays upbeat over vaccine hopes, US politics.
• China PMIs, risk catalysts to remain as the key drivers.

USD/JPY refreshes the intraday low to 104.05 as markets in Tokyo open for Monday’s trading. Although risk-on mood helped the buyers earlier in the day, the recent data releases from Japan recalled the bears while cheering a five-day losing streak.

Japan’s October month Retail Sales offered a surprise growth of 6.4% YoY versus market consensus of -7.7%. Further details suggest that the preliminary readings of October’s Industrial Production recovered from -14.5% forecast and -9.0% prior to -3.2% YoY.

Elsewhere, the market’s risk-tone remains positive as major coronavirus (COVID-19) vaccine developers are likely to get the regulatory approvals from the UK, Europe and the US. The same will fasten the process of delivery to the cure of the pandemic that has roiled 2020.

Also on the positive side are chatters concerning US President-elect Joe Biden’s team and their next steps, mainly surrounding the fiscal stimulus.

It should also be noted that the mixed signals relating to the Brexit deal also affect the risk catalysts while fears of the further increase in the covid numbers, until the vaccine hit the floor, offer an extra filter to the market optimism.

Against this backdrop, S&P 500 Futures stay mildly bid around the record highs marked in early November whereas Japan’s Nikkei 225 prints 0.40% gains to 26,752 by press time.

Although risk catalysts are likely to remain as the key drivers, China’s official activity data for November can offer an intermediate trade direction. Expectations favor a mild recovery in the headlines Manufacturing PMI but traders should remain cautious as the Aussie-China tussle can spoil the mood despite upbeat readings.

Technical analysis

Sustained trading below 21-day SMA, currently around 104.40, directs the USD/JPY prices towards a three-week-old ascending trend line, at 103.95 now.