USD/JPY tests the resistance zone into 108.00
As threatened, USD/JPY has tested the resistance zone in and around the 108.00 area, with a combination of factors having pushed the pair higher in recent sessions. The initial gains which saw 107.00 taken out, followed by the breach of 107.50 was off the back of higher fixed-income yields, with bond markets selling off in response to the improved risk tone which sees the Wall Street indices leading the way higher to prompt a potential retest of the record highs seen earlier in the year.
News yesterday that President Trump is looking to delay the Chinese tariffs set for imposition on the 1st October set off a fresh wave of money flowing into risk assets again, with the benchmark S&P 500 now trading above 3000 again as reflected in the futures markets. In turn, China is considering upping imports from US farmers in a sign of goodwill, so a relaxation in the trade tensions naturally follows through into the equity markets.
USD/JPY pushed up to highs around 108.16/18 in the overnight session, but with exporters maintaining their offers all the way up, the path higher is a staggered one at best and relies heavily on the risk mood staying positive - and more so at these levels.
The moves have been matched by the crosses, where AUD/JPY has outperformed the USD rate in the last 24 hours, and we can see this by the move higher in AUD/USD which is a little closer to the 0.6900 level, tipping the highs seen here earlier in the week. AUD/JPY hit highs a little shy of 74.50 overnight, but the pullback has been a modest one as yet and will also depend on how equity markets perform over coming sessions.