USD/JPY: Tokyo open welcomes risk-on mood, bulls battle 105.50

• USD/JPY takes the bids near intraday high, ignores Friday’s downbeat performance.
• Japan’s Nikkei 225, S&P 500 Futures benefit from hopes of US stimulus, virus vaccine.
• September month Trade Balance from Japan eased from ¥989.8 B forecast to ¥675 B.
• Powell’s speech, risk catalysts remain as the key amid a light calendar at home.

USD/JPY seesaws around the intraday high of 105.48, up 0.06% on a day, as Tokyo opens for Monday’s trading. The yen pair recently picked up bids as US President Donald Trump rekindled hopes of a bigger stimulus package to combat the coronavirus (COVID-19) as well as giving assurance to have the vaccine soon. Though, no-deal Brexit fears join rising virus numbers from Europe to challenge the bulls.

Trump tries to regain market confidence…

Having initially played hard on the US Democrats’ easy money demands, which likely weigh his chances of winning in the upcoming presidential elections, Trump tries to convince the market that he is not the reason for the delay in the much-awaited stimulus package. In his latest comments, US President said he wants the biggest stimulus deal that House Speaker Nancy Pelosi’s plan. The White House Chief also mentioned that COVID-19 vaccines will be coming out very soon.

Following the news, S&P 500 Futures gain half a percent to 3,480 whereas Japan’s Nikkei 225 also began the day with nearly 1.0% upside. Furthermore, US 10-year Treasury yields offer additional risk-on play with 1.3 basis points (bps) of gains to 0.757% as we write.

On the contrary, fears of hard Brexit have recently gained momentum after the Financial Times (FT) rolled out the news that the UK PM Boris Johnson is pushing British business to stay prepared for a no-deal Brexit. The latest European Union (EU) summit failed to solve the riddle even if UK PM Johnson stepped back from his earlier warning to leave the table after October 15. Furthermore, the virus numbers are rising in Europe and the UK, which in turn suggests another hit to the global economy even as it hasn’t overcome the first wave.

On the data front, Japan’s September month Trade Balance shrank from ¥989.8 B market consensus to ¥675 B. Details suggest -17.2% figures for Imports versus -21.4% forecast while Exports have dropped from -2.4% expectations to -4.9% YoY during the stated month.

Given the lack of data in Asia, except China’s third-quarter (Q3) GDP and September month’s data dump, USD/JPY traders may keep eyes on the risk catalysts for near-term direction. However, major attention will be given to the speech by Fed Chair Jerome Powell, at noon, for a better view of the markets.

Technical analysis

Although 21-day EMA near 105.50 restricts immediate upside of USD/JPY, bears may remain cautious unless witnessing a clear downside break of an ascending trend line from September 23, at 105.05 now.