USD/JPY retakes 114 handle within 2017 daily reversal from 111.55 support

USD/JPY has regained the 114 handle in a daily candlestick recovery from 111.55 support. We have seen a low of 113.17 and a high of 114.16 so far

USD/JPY is bid following last week bullish performance on Wall street where US equities made fresh record highs, and the US dollar and interest rates probed higher. USD/JPY was volatile last week in the closing session but closed little changed at 113.55. US 10yr treasury yields initially rose from 2.40% to 2.43% before consolidating and closing at 2.41%. Another supporting factor is where the Fed fund futures firmed by1bp, factoring in the chances of a March meeting hike at around 20% vrs June meeting at 100%. The CFTC report shows that funds reduced their net JPY shorts for the fifth week in a row ahead of the US-Japan summit on 10 February. A supporting factor for the Yen could well be with forthcoming elections in Holland and France and given the recent and heightened concerns over Greece, risk off could spring back in haste - the EU project is just one of many aspects to global uncertainty at unprecedented levels to be wary of. 

European finance ministers' meeting on Feb 20: Greece back as a major concern - BBH

Japan's Q4 2016 GDP a tad lower-than-expected

Domestically for Japan, the Q4 GDP was released and came slightly lower-than-expected at 0.2% QoQ vs 0.3% exp and 0.3% last, while the GDP annualised (seasonally adjusted) YoY was 1% vs 1.1% exp and 1.3% last. "Recent Japanese data have indicated a gradual recovery as the manufacturing PMI has been steadily trending up since mid-2016 to 52.7 and the 2016 current account surplus reached 20,650bn yen - the 2nd largest yearly surplus in history," explained analysts at Westpac, adding, "However, wage growth remains weak and consumer spending is lacking." 

USD/JPY levels

Analysts at Commerzbank recently noted that the rally has taken out the imoku 1 resistance and has its sights on the 114.56 Imoku 2 resistance and the 115.62 19th January high. "Above here is need to reintroduce scope to key short-term resistance offered by the 16-month resistance line at 118.10," argued the analysts who explained that below 111.59 would introduce scope to the base of the cloud, which lies at 109.92.