- USD/JPY crawled higher on Thursday, lacking any follow through buying.
- The risk-off market mood undermined the safe-haven JPY capping early gains.
- A pickup in USD demand was supportive, limiting downside.
The USD/JPY hit the daily low in early trade in the European session. However, the move lacked strong follow-through. USD/JPY trades mildly higher around104.50
USD/JPY failed to capitalize on early gains with sellers coming in around 25-30 pips from the intraday high of 104.75. Risk aversion took over amid fading hopes about a pre-election US fiscal stimulus package underpinning the safe-haven Japanese yen and limiting meaningful upside for USD/JPY.
House Speaker Nancy Pelosi will continue discussions with the US Treasury Secretary Steven Mnuchin. She remains optimistic about reaching a deal. However, she also acknowledged that the November 3rd deadline could be too tight. Concerns also rose over Congress’ ability to overcome strong opposition from Senate Republicans over such a large stimulus bill.
Furthermore, US President Trump accused Democrats of being unwilling to compromise on stimulus. All of this is playing out amid US political uncertainty, which is keeping the bulls from placing aggressive bets on USD/JPY. An increase in demand for the US dollar offered support and helped cap deeper losses.
Nevertheless, the USD/JPY trades close to its one-month lows, around 104.35 hit on Wednesday. The final presidential debate between President Trump and Democratic candidate Joe Biden is now in focus in addition to US Initial Weekly Jobless Claims.