Better-than-expected data printed during the Asian session weighed on the dollar today.
Can the Greenback recover some of its losses against the yen?
Before we talk setups, lemme show you the top headlines from the last couple of hours:
- U.S. new home sales drop; record low mortgage rates underpinning demand
- Merkel plans ‘lockdown light’ to slow infection wave in Germany – Bild
- France sees highest number of COVID-19 patients going into hospital since April
- SNB says Swiss banks have weathered pandemic well so far
- Fall in imports, healthy exports leads to NZ trade milestone
- Australia GDP growth likely turned positive in Q3 – RBA’s Debelle
- BOJ’s annualized core CPI dips by 0.1% vs. 0.0% expected and previous
- Japan FinMin Aso: Hong Kong’s weaker financial hub appeal is Japan’s opportunity
- China’s industrial profit growth slows as factory-gate deflation weighs
- Amy Coney Barrett sworn in to Supreme Court
- Asian shares hit by surging coronavirus cases, U.S. stimulus woes
- Dollar retreats again in Asia as solid data offsets virus worries
Upcoming Potential Catalysts on the Economic Calendar:
- RBA Assistant Governor Michele Bullock to give a speech at 6:00 am GMT
- Spain’s unemployment rate at 8:00 am GMT
- U.K.’s CBI realized sales at 11:00 am GMT
- U.S. core durable goods orders at 12:30 pm GMT
What to Watch: USD/JPY
In case you missed the chart above, the dollar was a loser all around during the Asian session. See, traders chose to price in a strong industrial profits data from China and an upside surprise in New Zealand’s trade numbers.Can the dollar recover some of its losses, at least against the yen? USD/JPY is hanging out at an ascending channel support on the 1-hour time frame. What’s more, Stochastic is flashing a nice bullish divergence on the chart.
I’m not seeing any big data releases during the London and early U.S. session, so it’s likely that risk sentiment will move USD/JPY today.
Progress on a stimulus package, or more “evidence” that the U.S. won’t see a contested election could improve overall risk appetite and the demand for the dollar. USD/JPY could retest its channel resistance near 105.00!
If the dollar-selling theme extends to the London and U.S. sessions, however, then USD/JPY could break below its channel and head for its October or even its mid-September lows.