USD/JPY keeps Wednesday’s gains above 106.00 amid cautious optimism

• USD/JPY keeps the previous day’s break of 106.00 despite recently easing from 106.06.
• Risk sentiment remains mildly positive as US President Trump tries to regain market confidence with stimulus, vaccine hopes.
• Japan’s trade and current account numbers flashed welcome data for August.
• US VP debate, Japan’s Eco Watchers Survey will be the key.

USD/JPY stays positive at around 106.10 as markets in Tokyo open for Thursday’s trading. In doing so, the pair struggles to justify the recent risk-on mood and upbeat data from Japan ahead of US Vice Presidential (VP) Debate.

Japan’s August month’s Current Account balance grew past- ¥1983.7 B forecast to ¥2102.8 B. Also on the positive side is Trade Balance – BOP Basis that rose beyond ¥137.3 B previous readouts to ¥413.2 B.

Traders’ doubt on Trump’s optimism…

US President Donald Trump recently said he feels perfect and the coronavirus (COVID-19) vaccine will be out just after the November month’s election, due to the political problems. The Republican chief is also ready to consider the Democrats’ counterproposal, as per the White House Chief of Staff Mark Meadows, if House Speaker Nancy Pelosi respects the administration’s stand. However, market players are less convinced as there is very little time before the world’s largest economy head to the Presidential election. The political drama has already taken a long time and is still failing to offer any stimulus, which in turn adds to the odds of opposing Trump’s upbeat sentiment.

It’s worth mentioning that the news from Yomiuri suggests Japan will remove the travel ban for 12 countries including China from next month also added to the market-positive points but failed to lure the bulls. Also, the Fed minutes and recent comments from US central bank policymakers have been trying to negate any pessimism.

Against this backdrop, Japan’s Nikkei 225 rises 0.40% to reach near to the pre-pandemic era whereas S&P 500 Futures add 0.20% gains to 3,413 by the time of the press.

Looking forward, the US Vice Presidential Debate, at 01:00 GMT, will be an immediate catalyst and is likely to offer another positive signal to the risk tone. Following that, Japan’s Eco Watchers Survey for September and the US Jobless Claims will join hands with the risk factors to entertain markets.

Technical analysis

A sustained break of 50-day SMA, currently near 105.85, can keep the bulls directed towards the September month high of 106.55.