- USD/JPY gained some positive traction on Thursday amid resurgent USD demand.
- The risk-off mood, sliding US bond yields kept a lid on any strong gains for the pair.
The USD/JPY pair held on to its modest gains through the early North American session, albeit lacked any strong follow-through and retreated around 15 pips from daily tops.
The pair managed to regain some positive traction on Thursday and moved away from near two-week lows, around the key 105.00 psychological mark touched in the previous session. The uptick was exclusively sponsored by a strong pickup in the US dollar demand, though a fresh wave of the global risk aversion trade kept a lid on any strong gains for the USD/JPY pair.
Against the backdrop of a setback in the development of a vaccine for the highly contagious coronavirus diseases, concerns about a rapid rise in new COVID-19 infections provided a goodish lift to the greenback's status as the global reserve currency. The USD bulls remained in control following the release of mostly disappointing US macro data.
In fact, the US Initial Weekly Jobless Claims unexpectedly jumped to 898K during the week ending October 10th and the previous week's reading was revised higher to 845K from 840K reported earlier. Separately, the Empire State Manufacturing Index fell more than expected, to 10.5 in October from 17 recorded in the previous month.
Meanwhile, the Philly Fed Manufacturing Index surged to 32.3 in October as against consensus estimates pointing to a modest downtick to 14 from the previous month's reading of 15. The data, however, did little to provide any meaningful impetus to the USD/JPY pair. However, the prevalent risk-off mood undermined the safe-haven Japanese yen and capped the upside.
The global risk sentiment took a hit in the wake of fading hopes of additional US fiscal stimulus measures. This was evident from a fresh leg down in the equity markets and reinforced by a steep fall in the US Treasury bond yields.
Technical levels to watch
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