FX Action: USD-JPY has traded moderately softer

FX Action: USD-JPY has traded moderately softer today, back under the 104.50 level after the pair lifted to a nine-day high at 104.65 yesterday. The above-forecast November PMI data out of the U.S. yesterday provided a reminder of the U.S. GDP growth advantage relative to Japan, and European economies, although with Covid countermeasures tightening in many parts of the U.S., this is now being eroded. The real interest rate differential between the U.S. and Japan is also a mathematical negative for the nominal dollar vs yen exchange rate. Both currencies are still be viewed as safe havens, too, which limits the scope of USD-JPY directional change. Outside the case against the dollar, the yen has been softening, especially against the cyclical currencies, including the dollar bloc. EUR-JPY ascended to one-week high territory, while AUD-JPY and NZD-JPY lifted into respective 12-day and 10-month high terrain. BoJ Governor Kuroda pledged more stimulus today, dependent on there being increased economic impact from Covid countermeasures. The yen's broader performance should continue to hinge on risk appetite in global markets. Japan's surplus economy, where yield-seeking domestic investors are apt to invest in foreign assets during times of confidence, but repatriate funds when times are uncertain, has established the yen as a low-beta haven currency.