USD/JPY: bulls seeking a break through the psychological 110 level

• USD/JPY is sitting pretty in the high 109.70s as risk sentiment improves. 
• US yields, commodities and the dollar are all firmer. 
• FOMC believes that the current stance of monetary policy will support continued economic growth,
• Coronavirus new cases are slowing down, according to China’s National Health Commission.

USD/JPY is currently trading at 109.77 between a range of 109.74 and 109.96 with bulls seeking a break the 110 handle on improved risk sentiment and a strong US dollar. 

We have seen rising hopes that the spread of the novel coronavirus may be slowing in China which has supported US benchmarks higher, commodities and US yields, all weighing on the yen. We also listened to a cautious but upbeat assessment by Fed Chair Powell also supported markets:

“The FOMC believes that the current stance of monetary policy will support continued economic growth, a strong labour market, and inflation returning to the Committee's symmetric 2 percent objective. As long as incoming information about the economy remains broadly consistent with this outlook, the current stance of monetary policy will likely remain appropriate."

Coronavirus new cases slowing down

China’s National Health Commission on Tuesday said the number of new, confirmed cases fell to 2,478 from 3,062 a day earlier, bringing the total to 42,638 on the mainland, including some of whom have since recovered and been released from treatment. This is signifying that the Chinese are making progress in combatting and containing the virus.

However, given the lack of macro indicators to gauge the impact of the coronavirus outbreak on China’s real economy, it is hard to know what the fall out will be and what impact it will have on the Chinee and global economy. what we do know from analysts at Standard Chartered Bank (China) Limited, is:

• Big data shows only 30% of migrant workers have returned after the holidays amid coronavirus fears.
• Very few people are out on the streets; business is unlikely to return to normal until late February.
• Manufacturing sector faces a longer delay in operations; energy producers are less affected.
• Consumption hit hard, though online sales slowed for shorter period; production activity has stalled.

USD/JPY levels