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USD/JPY better bid near 107.40 amid talks of additional US stimulus

  • USD/JPY extends overnight gains amid signs of risk reset in markets. 
  • White House Advisor Kudlow says that the Trump administration is open to targeted aid to states. 
  • China’s data dump could make or break risk assets and influence demand for yen.

The bullish momentum around USD/JPY is gathering steam with traditional markets reporting risk reset, possibly on hopes for additional US fiscal stimulus. 

The pair is currently trading near 107.40, representing a  0.17% gain on the day, having hit a high of 107.44 soon before press time. The dollar found bids at lows near 106.75 on Thursday and has been gaining altitude ever since. 

Risk reset

The uptick in USD/JPY is accompanied by moderate gains in the US stock futures and mixed action in the Asian equities. While the Japanese and the Australian stocks are reporting over 0.5% gains at press time, names like Hang Seng and Kospi are flashing red. 

White House Advisor Larry Kudlow was out on the wires late Thursday, stating that the Trump administration could be open to targeted aid to states related to the pandemic and the US economy could see a “V-shaped” recovery. 

The US Senate Majority leader Mitch McConnell said that another general fiscal stimulus package cannot be ruled out. 

While the dollar is currently drawing bids amid increased hopes for additional stimulus, the pair’s ascent may stall if China’s Retail Sales and Industrial Production data prints well below estimates, derailing the risk reset and pushing the anti-risk yen higher. 

Technical levels

 

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