USD / JPY clings to modest gains near daily highs, around the 104.70 region

• USD / JPY managed to regain traction on Thursday amid resurgent demand for the USD.
• The cautious mood benefited the safe-haven JPY and limited strong gains.
• Investors are now expecting the Trump-Biden debate to have a trade boost.

The pair USD/JPY It traded on a positive bias during the early North American session and was last seen trading near the upper end of its daily trading range, around the 104.70 region.

A good recovery in US dollar demand helped the pair gain some positive traction on Thursday and move away from the six-week lows hit in the previous session. However, the cautious mood prevailing in the equity markets extended some support to the safe haven status of the Japanese yen and could contain any significant rally for the USD / JPY pair.

The dollar attracted some buying amid slow progress in the US stimulus talks, clouding the prospects for pre-election fiscal measures. Investors largely ignored and seemed rather unimpressed by the optimistic comments from House Speaker Nancy Pelosi, saying they will soon be ready to write on the stimulus bill.

Pelosi further added that the aid bill could pass the House before Election Day. Given strong opposition from Republicans to a larger stimulus bill, investors did not appear to be convinced that the bill could actually pass the Senate. This, in turn, affected investor sentiment and the same was evident in a flat open in the US equity markets.

In addition to developments related to the US fiscal stimulus, the USD bulls were further inspired by Thursday’s better-than-expected release of the initial weekly US jobless claims. The number of Americans who applied for unemployment insurance for the first time dropped to 787,000 compared to the previous week’s revised downward reading of 842,000.

The focus now shifts to the final presidential debate between President Donald Trump and his Democratic rival Joe Biden. This makes it prudent to wait for a solid follow-up to buying before confirming that the USD / JPY pair could have found an intermediate bottom and a positioning for any further appreciation moves.