USD / JPY above 104.00 as key risk events loom later this week

• In keeping with a subdued mood for forex trading on Tuesday, USD / JPY is trading flat just above 104.00.
• The JPY has ignored the national news and focused on key risk events later in the week.

Currency markets are quite hesitant on Tuesday, as markets apparently look towards key risk events later in the week, such as the ECB meeting, the EU council summit, British Prime Minister Johnson’s visit to Brussels to try to close a Brexit deal and the potential of the FDA. approve Pfizer’s Covid-19 vaccine by the end of the week. Therefore, the USD/JPY remains subdued just above the 104.00 level, with a further decline in US real and nominal yields helping to keep the pair supported just above the big figure. In the day, the pair is flat.

JPY ignores Japanese data

Stronger-than-expected final Japanese GDP figures for the third quarter helped the JPY little during the Asian session on Tuesday; GDP growth in the quarter was revised up to 5.3% quarter-on-quarter from 5.0% in the previous estimate, with the annualized quarterly GDP growth rate jumping to 22.9% from 21.4%. Thus, Tuesday’s data confirmed that the Japanese economy grew at the fastest pace since data records began in 1994. Meanwhile, household spending data for October was strong, with spending increasing by 2.1 % versus expectations of a 1.0% increase in the month.

JPY, meanwhile, was largely unfazed after the government delivered its widely-anticipated third supplemental budget of the year, which involved roughly JPY40T in direct tax expenditures and initiatives aimed at reducing emissions and boosting digitization.

Looking ahead, JPY traders will be on the lookout for the release of core machinery order data at 11:50 PM GMT, which is expected to show a 2.8% month-on-month increase in orders in October, but down YoY 11.3%. But as has already been the case this week, the Japanese data is set to play a secondary role to the broader themes dominating the markets right now.