August 17, 2022 12:22 AM ET
By: AnalysisWatch
The USD/JPY pair is holding on to the recent bullish bias as it picks up offers at the Tokyo market open on Wednesday to refresh the intraday high at 134.40. The yen pair's recent upward movement may be related to firmer yields.
In this regard, the quote ignores the retreat of the US dollar and tries to justify the mixed data from home and abroad.
For example, Japan's merchandise trade balance fell to -1,436.8 billion in July from -1,405 billion expected and the previous reading of -1,383.8 billion. Other details indicate an improvement in exports and imports in the said month. Also positive were the results of the Tankan manufacturing survey in August. Reuters reported that "Japanese manufacturers' business confidence improved in August after stalling last month, while sentiment in the services sector rose for a second month to its highest level in nearly three years, the Reuters Tankan survey showed."
In addition, Japanese machinery orders rose 0.9% in June from the previous month, government data showed on Wednesday, below the 1.3% increase economists had expected in a Reuters poll.
Building permits rose to 1.674 million (MoM) in the aforementioned month from market expectations of 1.656 million and previous readings of 1.696 million, while U.S. industrial production rose 0.6% in July from 0.3% expected and an upwardly revised 0.0% in the previous month. It should be noted that housing starts declined to 1.446 million from 1.599 million and 1.54 million previously expected.
The U.S. dollar index (DXY) hit its three-week high again before retreating from 106.94. The greenback's exchange rate against the six major currencies earlier benefited from the flight to safety, as China's willingness to take numerous measures to curb its recession problems was added to by Europe's signals to extend the nuclear agreement with Iran, while plans to close Germany's last three nuclear power plants were put on hold. In the same context, the Washington Post (WaPo) reported that Chinese authorities have ordered factories to suspend production in several key manufacturing regions to conserve electricity as the country faces its worst heat wave in six decades.