Firms Up Amid Risk Recovery, Keeps Testing 50-DMA

A recovery in risk sentiment prompted USD/JPY to stage a recoil, capped by the 50-DMA, which has now kept a lid on the pair for five consecutive session. The pair remains within touching distance from the level.

• With the rate trading virtually unchanged at Y106.20, a break above the 50-DMA at Y106.32 & Sep 3 high of Y106.55 would draw attention to Aug 28/13 highs of Y106.95/107.05. Meanwhile, losses past Sep 9 low of Y105.80 would expose Aug 28/19 lows of Y105.20/10.
• NHK cited Japanese Dfence Minister Kono as saying that he expects a snap general election in October. Given the recent boost in the government's approval ratings, which coincided with growing expectations that current Chief Cabinet Sec Suga will replace Shinzo Abe as PM, a snap poll could allow the LDP party to widen its parliamentary majority.
• Yomiuri reported that the government considers including Tokyo in its travel campaign, starting from October. Separately, Asahi said that Tokyo's virus alert will be lowered by one notch from the highest of 4 levels.
• Japanese core machine orders will be published today. PPI & BSI Survey are due tomorrow.