USD/JPY: Recovery gathers steam on US-China trade deal hopes

• USD/JPY rises 10-pips and regains 108.50 on US’ Kudlow’s trade optimism.
• US Treasury yields, S&P 500 futures rebound alongside positive Asian stocks.
• Focus on US-China trade talks, US Retail Sales data for fresh impetus.

The USD/JPY overnight rebound extends in Friday’s Asian trades, as the bulls regain the 108.50 after the risk-recovery gathered steam on renewed optimism surrounding the US-China trade deal.

Fresh hopes of a US-China trade deal returned to markets following the goodwill gestures by China, as it announced lifting the restrictions on the US poultry imports. Further, the news of the restart of the US-China trade talks later on Friday also added to improved risk appetite.

However, the latest comments from the White House Economic Adviser Kudlow, citing that “we're getting close” to trade deal with China, acted as the main catalyst behind the latest pop in the risk sentiment, as reflected by the bounce-back in the US Treasury yields and S&P 500 futures.

On Thursday, the spot fell to its lowest level in eight days at 108.25 after global stocks and US Treasury yields tumbled on souring risk sentiment, in response to fresh China slowdown fears and Germany’s narrow escape to a recession.

The focus will likely remain on the primary level phone call between the US and Chinese trade teams for fresh cues on the risk trends that will eventually impact anti-risk Yen in the day ahead. Also, of relevance remains the US Retail Sales data due later in the NA session at 1330 GMT.

USD/JPY Technical levels to consider