USD/JPY: Mildly positive beyond 106.50 following downbeat Tokyo CPI
- USD/JPY pays a little heed to inflation numbers from Tokyo.
- Tokyo CPI eases to 0.3% versus 0.8% forecasts, Core CPI reversed +0.3% expectations with -0.3% figures.
- Market sentiment remains positive following Fed Chair Powell’s speech.
- Chatters concerning the US stimulus, virus updates will join news from the Jackson Hole Symposium for immediate direction.
USD/JPY stays on the front-foot around 106.65, up 0.10% on a day, following the release of the Tokyo Consumer Price Index (CPI) during the early Friday. Even if the data received no major reaction, downbeat outcomes join the risk-on mood to propel the yen pair further towards the north.
Not only the headline CPI data that missed the forecast and prior by flashing 0.3% mark, the Ex-Fresh Food CPI, mostly known as Core CPI, also joins the line with -0.3% numbers. Furthermore, the ex-Food and Energy CPI data lagged below 0.5% market consensus and 0.6% prior with -0.1% actual.
Read: Japanese Tokyo CPI YoY Aug: 0.3% (exp 0.6%; prev 0.6%), yen unchanged
Fed Chair adds to the risk-on mood…
Following Federal Reserve (Fed) Chairman Jerome Powell’s readiness to offer the Average Inflation Targeting (AIT), a move that will result in prolonged low-interest, market sentient buoyed amid hopes of further easy money.
Also adding to the upbeat mood are chatters concerning the US coronavirus (COVID-19) stimulus package. Recent updates concerning the key issue suggest House Speaker Nancy Pelosi’s sustained favor to cut the Democratic demand to somewhere in the middle of $2.2 trillion.
Additionally, news that Japan’s Prime Minister (PM) Shinzo Abe is planning to provide the virus vaccine for the entire nation offers additional strength to the market optimism.
Amid all these catalysts, news like China bans Aussie been (again) and the noise surrounding TikTok gets fewer audiences. As a result, the S&P 500 Futures nears the record high that teases 3,500.
Looking forward, traders will keep eyes on the risk catalysts amid a lack of major data/events in Asia. However, the broad risk-on mood can keep the quote on the positive side unless wither any worrisome comments roll out of Wyoming or the US data mark heavy declines.
Technical analysis
An upward sloping trend line from July 01, at 106.70 now, followed by a 100-day SMA level of 107, could keep exerting downside pressure on the quote. Though, sellers are less likely to be convinced unless the quote slips below the monthly support line, currently around 105.55.