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  • USD/JPY pops in the Tokyo open to fresh highs.
  • US dollar firming on Asia across the board, pushing bears back through 103.20. 

USD/JPY has rallied in the Tokyo open and has printed fresh highs of 103.25 so far. The price has moved some 0.16% higher on the Asian session from a low of 103.05. 

The US dollar was under pressure again overnight following the Federal Reserve the prior day and continued expectations of fiscal stimulus. 

The risk-on mood persists, sinking the DXY to a fresh low of 89.73. 

DXY daily chart

The move was significant from a weekly perspective, extending below what might have been expected to be solid support:

However, the US dollar has come up for some air in Asia, giving life to USD/JPY.

Mixed risk-sentiment surrounding Brexit and US Congress

Meanwhile, US congressional leaders continued working on the details of a nearly $900 billion coronavirus relief plan.

Investors are in anticipation of them unveiling it possibly before the weekend for which US stock markets rallied upon.

Wall Street Close: Record highs ahoy in anticipation of stimulus

”Senate Majority Leader McConnell, House Speaker Pelosi, Senate Democratic leader Schumer and House Republican leader McCarthy have been directly involved in the negotiations, raising prospects for a package that can pass both the House and Senate,” analysts at Westpac explained. 

In other risk-related themes, Brexit negotiations took a turn for the worse again.

UK PM Johnson and European Commission President von der Leyen spoke ahead of the NY close, but things did not go so well according to various announcements from officials on both sides of The Channel.

UK PM’s call with European Commission President Ursula von der Leyen, GBP pressured

As for data, markets skimmed over it, preferring to look through the worsening outlook in hope of the vaccine roll-out and enough stimulus to support economic growth in 2021. 

Reflecting the impact of increased Covid cases and restrictions, US initial jobless claims rose to 895k (est. 815k, prior week revised to 862k from 852k), while continuing claims dipped to 5.508mn (est. 5.70mn, prior 5.781mn).