After having everything but the kitchen sink thrown at it over the past few days USDJPY has managed to withhold the risk aversion flows and trade above the 107.00 level by end of trade today. The never-ending political chaos in Washington DC no longer seems to have much impact on the pair as the friction over the trade tensions with China eased with President’s Xi’s conciliatory speech and President Trump’s never-ending legal problems are now ignored by the market. There is still risk that Trump could bomb Syria in response to the chemical gas attack, but unless that action is followed by expansion of military activities the market may ignore it as well.
Meanwhile, on the economic front, there is a lot o like for dollar bulls. Today’s hotter than expected PPI numbers suggest that CPI could rise as well, further solidifying the case for another Fed rate hike and tomorrow’s release of FOMC minutes is likely to confirm that the Fed will maintain its tightening bias.
Technically the USDJPY pair has made a solid inverted head and shoulders bottom and now looks like its ready to challenge the 108.00 figure if data proves supportive.