USD/JPY climbs back closer to daily tops, lacks follow-through
- The USD remains on the defensive despite Friday’s mostly in line US releases.
- Bulls took cues from a modest uptick in the US bond yields/positive equities.
- The key focus remains on the outcome of Trump-Xi meeting at G20 summit.
The USD/JPY pair extended its steady intraday climb and jumped to the top end of its daily trading range, around the 107.80 region post-US data, albeit lacked follow-through.
The US Dollar held on the defensive and had a rather muted reaction to the latest US economic releases, showing that personal spending increased for the third month in a row and at a healthy 0.4% rate in May. This coupled with an upward revision of April's reading - to 0.6% from 0.3% reported previously, suggested that the US economy is still on solid grounds.
Meanwhile, the core PCE price index - the Fed's preferred inflation gauge, remained well below the 2% target and did little to shift market expectations for a July rate cut and thus, failed to provide any meaningful impetus. Bulls, however, took cues from a modest pickup in the US Treasury bond yields and stable risk sentiment, which tends to weigh on the Japanese Yen's safe-haven status.
The uptick, however, lacked any strong conviction as market participants still seemed reluctant to place any aggressive bets and preferred to stay on the sidelines ahead of the highly anticipated meeting between the US President Donald Trump and his Chinese counterpart Xi Jinping on the sidelines on G20 summit in Japan.
Technical levels to watch