- USD/JPY remains strong following welcome GDP figures at home.
- Japan’s preliminary Q4 GDP came in better than forecast 2.3% QoQ.
- Risks remain positive amid hopes of US stimulus, global vaccine drive.
- Japan Industrial Production, risk catalysts eyed amid US, China holidays.
USD/JPY stays firmer around 105.00, currently near an intraday high of 105.08, following the release of Japan’s fourth-quarter (Q4) GDP data during Monday’s Asian session. Even so, the Japanese yen fails to cheer strong fundamental figures as risk-on mood favor USD/JPY buyers. While searching clues behind the moves, the latest rally in equities, as well as Treasury yields, could be heard in echo.
Japan's GDP came in stronger but not promising…
Although the headline QoQ figures crossed the 2.3% forecast with 3.0%, the data lagged behind the market consensus of 1.0% forecast on the YoY basis with a 0.2% mark. Also, these preliminary readings are well below the previous announcements and hence portray sluggish momentum in the Japanese economy. Following the GDP release, Japan's Economy Minister Yasutoshi Nishimura said, per Reuters, that the economy is still below its pre-pandemic level. The Japanese diplomat also highlighted the need to pay close attention to the downside risks to the economy.
Read: Japanese GDP QoQ arrives at 3% vs 2.3% expected and 5.3% prior
USD/JPY traders seem to follow the recent recovery in risks while turning down the key Japanese data. In doing so, hopes of the US covid relief package and the recent vaccination drive at the various global leaders favor the sentiment.
At home, Kyodonews conveys the challenges to the Japanese government’s likely jab start, during this week, amid lack of dry ice.
Against this backdrop, S&P 500 Futures rises 0.10% whereas Japan’s Nikkei 225 is up 1.0% by press time. Further, the US 10-year Treasury yields stay strong near the yearly high of 1.21%.
Moving on, Japan’s December month Industrial Production, expected to remain unchanged near -3.2%, can keep the USD/JPY pair on the front-foot. Though, any challenges to the risk, which are less likely considering the off in China and the US, may probe the bulls.
Technical analysis
USD/JPY bulls are primed for refreshing the monthly top near 105.75 unless declining below a six-week-old support line, currently around 104.50.
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