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  • USD/JPY snaps two-day downtrend, refreshes intraday top.
  • Japan PPI came in better than forecast in April.
  • Nikkei 225, S&P 500 Futures print mild gains amid risk-on mood.
  • China data, risk catalysts should be watched for fresh impetus.

USD/JPY differs from the previous two-day declines while taking bids near 109.45, up 0.13% intraday, as Tokyo opens for Monday. While Japan’s Producer Price Index (PPI) for April could be cited as the latest push to the north, risk-on sentiment helps the yen pair to please the bulls.

Japan PPI crosses 0.5% MoM and 3.1% YoY forecasts with 0.7% and 3.6% figures respectively. The upbeat data helps extend Friday’s risk-on mood despite the coronavirus (COVID-19) woes in Japan.

Friday’s downbeat US data favored the Fed policymakers to defend the easy money framework and helps boost the market sentiment. Also on the positive side could be the steady vaccinations in the West and the recently announced mask mandate in the US.

Alternatively, strict activity measures commenced in Japan’s six prefectures this Sunday as the government struggles to tame the coronavirus (COVID-19) cases ahead of the scheduled Olympics. Also on the risk-negative side could be the geopolitical unrest in the Middle East.

Despite mixed catalysts, Japan’s Nikkei 225 prints 0.40% intraday gains while S&P 500 Futures remain 0.10% up by the press time. It should, however, be noted that the US dollar index (DXY) consolidates Friday’s losses whereas US Treasury yields struggle for fresh clues while writing.

Looking forward, the covid updates from Japan and Fedspeak could be the key for USD/JPY traders. However, China’s April month’s Industrial Production and Retail Sales, expected 9.8% and 24.9% YoY respectively versus 14.1% and 34.2% in that order, can offer immediate direction to the risk-barometer.

Technical analysis

A three-week-old rising wedge formation restricts short-term USD/JPY moves between 109.80 and 108.90.


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