- Yen outperforming among G10 currencies despite risk sentiment.
- USD/JPY down for the fifth consecutive day, eyes 103.45/50.
The USD/JPY resumed the decline after a short-lived rebound to 104.10 and recently bottomed at 103.64, the lowest level since November 9. It remains under pressure, with a bearish bias intact amid US dollar weakness.
Markets are modestly higher on Wednesday, supported by positive news regarding the coronavirus vaccine. The Dow is gaining 0.45%, and the Nasdaq is adding 0.04%. Pfizer mentioned its vaccine was 95% effective in its study and it plans to seek authorization within days.
Regarding data, US housing starts came in above expectation. In October climbed 4.9% to the highest level since February. Building Permits remained flat against expectations of a modest increase.
US bond yields are lower on Wednesday but off lows. The 10-year yield bottomed at 0.84%, and it stands at 0.868%. Even during the rebound in yields, USD/JPY remained under pressure.
The correlation between USD/JPY and risk sentiment continues to deteriorate, partially due to a weaker US dollar. While the Dow Jones holds near record highs, USD/JPY is about to post the fifth decline in a row, consolidating below 104.00 that could lead to a test of 103.00/10 (November lows).
Credit: FX Street