- USD bulls attacking in in late European session amid higher US bond yields.
- USD/JPY gets a boost and is targetting the high of the day.
The USD/JPY is trading at around 107.41 on Thursday up 0.17% as the US dollar bulls came out of nowhere in late European session driven by higher bond yields.
The dollar benefited from positive housing data this week and Fed members, which were rather optimistic in their speeches. Dudley Williams, the incoming President of the New-York Federal Reserve was especially upbeat on the economy.
On the broader picture, US yields are higher, while gold is down flirting with $1,340 a troy ounce.
On Thursday US equities are seeing a pullback from the recent advance which was driven by enthusiasm around the earnings season on Wall Street. Investors have been sweeping concerns over Russian sanctions and trade wars under the rug of late as the “Trump risk” as called by some analysts seems to be priced in.
The yen is sensitive to geopolitical turmoils and stock market panic as it is seen as a safe-haven currency. After the recent gains in stocks, it is natural to see some profit-taking at some point. The yen is relatively soft against the USD confirming that the market is not in panic mode.
The day is relatively light on the calendar. A speech by FOMC member, Loretta J. Mester, president and chief executive officer of the Federal Reserve Bank of Cleveland, is slated for 22:45 GMT while the Japanse National Consumer Price Index (CPI) dataset is scheduled for 23:30 GMT. The National CPI is not as relevant as the Tokyo CPI, however, investors will be on the lookout for any strong deviation.
USD/JPY 4-hour chart
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The USD/JPY has a bullish momentum and support lie at 106.87 and 105.73 swing lows while resistance is priced in at 107.53 swing high and at 107.79 cyclical high.
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EUR/USD treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
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