USD / JPY regains ground it initially lost, around 105.40 following the US data.

• The emergence of new selling around the USD put pressure on the USD / JPY.
• The USD gained some respite following the release of upbeat US retail sales data.
• The decline in safe-haven demand undercut the JPY and extended some support.

El by USD/JPY it reversed an intraday slide to the 105.20-15 region and moved to the upper end of its daily trading range following the release of the US monthly retail sales figures.

The pair encountered fresh offers on the last trading day of the week and trimmed a portion of the good bounce the day before from near the key psychological level of 105.00. The emergence of new sales around the US dollar was seen as a key factor putting pressure on the USD / JPY pair.

The USD gained some traction in reaction to stronger than expected US retail sales data. In fact, overall sales unexpectedly posted strong growth of 1.9% in September. In addition to this, core retail and the closely watched retail control group also performed better than expected, although they did provide some respite to the USD bulls.

Apart from this, signs of a strong opening in the US equity markets undermined the demand for the Japanese yen as a safe haven and further contributed to the intraday USD / JPY bounce of around 20 pips. The rally, however, lacked a strong following, warranting some caution before positioning itself for any further appreciation moves.

The US economic schedule on Friday also includes the release of industrial production data and the preliminary estimate of the Michigan consumer sentiment index for October. Given that attention remains focused on events related to additional US fiscal stimulus, the data is unlikely to provide any impetus and will go unnoticed.

Technical levels