- The USD / JPY took on new offers on Thursday amid a modest recovery in demand for USD.
- The rise did not appear to be affected by a lower sense of risk and a deterioration in US-China relations.
- Investors are now eagerly awaiting US macroeconomic data before the BoJ on Friday.
USD / JPY returned to positive traction on Thursday and reversed the slight decline from the previous day. The pair was last seen near the upper end of its daily trading range around the 107.75-80 region, with the bulls making another attempt to continue beyond the SMA at 50 days.
Despite Wednesday’s FOMC minutes, the US dollar managed to find buying interest and recouped some of its recent losses. A stronger greenback was seen as one of the main factors pushing the USD / JPY up at the start of Thursday’s European session.
Meanwhile, investors seemed confident that the Bank of Japan could introduce extraordinary policy easing at an unexpected meeting on Friday. This, combined with a larger-than-expected increase in the Japanese trade deficit in April – driven by a 21.9% drop in the country’s exports – further weighed on the national currency.
The USD / JPY pair moved closer to the one-month highs set for Tuesday and did not appear to be affected by concerns over worsening US-China relations. In the latest development, the United States Senate passed a bill that could prevent some Chinese companies from selling stocks on the US stock exchanges.
The risk of a further escalation of disputes between the two largest economies in the world weighed on investor sentiment and manifested itself in a weaker tone surrounding global stock markets. The bulls, however, ignored the softer risk tone, but instead hinted at a favorable recovery in demand for USD.
In the future, market players are now eagerly awaiting the US economic record, with publications from the Philly Fed Manufacturing Index, initial jobless weekly demand and the manufacturing PMI Flash. The data could provide momentum later at the start of the North American session and help traders seize short-term opportunities ahead of the BoJ on Friday.