USD/JPY clings to modest gains near one-week tops, around 104.75 region
- USD/JPY managed to attract some dip-buying amid receding demand for the safe-haven JPY.
- The US political uncertainty held the USD bulls from placing fresh bets and capped the upside.
- Investors look forward to the release of US ISM Manufacturing PMI for some trading impetus.
The offered tone surrounding the safe-haven Japanese yen assisted the USD/JPY pair to hold steady near the top end of its daily trading range, around the 104.75 region, or one-week highs.
Following a bearish gap opening at the start of a new trading week, the pair attracted some dip-buying near mid-104.00s and turned positive for the third consecutive session. Despite growing market worries about the economic fallout from fresh coronavirus-induced lockdowns in many Western countries, upbeat Chinese macro data dented demand for traditional safe-haven assets and was seen as a key factor that assisted the USD/JPY pair to regain some positive traction.
China's official manufacturing PMI released over the weekend showed that the manufacturing sector in the world's second-largest economy expanded for the eighth straight month in October. Adding to this, a private survey showed this Monday that China’s manufacturing PMI climbed to 53.6 for October from the previous month's reading of 53.0. The data boosted investors' confidence, albeit the uncertainty over the outcome of the US presidential election capped the optimism.
National opinion polls have been indicating a clear lead for Democratic challenger Joe Biden. However, investors remain wary as the gap is narrow in key battleground states. This held the US dollar bulls from placing fresh bets and kept a lid on any runaway rally for the USD/JPY pair, warranting some caution before positioning for any further appreciating move.
In the meantime, Monday's release of the US ISM Manufacturing PMI will be looked upon for some impetus. Apart from this, the broader market risk sentiment and developments surrounding the coronavirus saga will also be looked upon to grab some meaningful trading opportunities.
Technical levels to watch