During Tuesday’s early European trading session, the USD/JPY currency pair managed to extend its winning streak of the previous session, drawing some further bids well above the 104.00 level. However, the bullish sentiment surrounding the currency pair has remained supported by the optimism over the rollout of COVID-19 vaccines and the hopes of additional US fiscal stimulus measures, which boosted the market trading sentiment and undermined the demand for the safe-haven Japanese yen. It was seen as one of the key factors that pushed the USD/JPY pair higher.
The market trading sentiment has been gaining positive traction since the day started, receiving support from the optimism over the rollout of COVID-19 vaccines and hopes for additional US fiscal stimulus measures. As per the latest report, US President-elect Joe Biden is ready to take office on January 20, when he will push for the $ 1.9 trillion stimulus package that was already outlined last week. In the meantime, Treasury Secretary nominee Janet Yellen is also expected to push the government to “act big” with its next coronavirus relief package when she testifies before the Senate later on Tuesday.
On the data front, China’s 4th quarter (Q4) GDP increased from 6.1% to 6.5% YoY, but on a QoQ basis, it eased to 2.6%, against the predicted 3.2% and the previous 2.7%. Moreover, Industrial Production for December grew past the expected 6.9%, to 7.3% YoY, while Retail Sales fell below the previous readout of 5.0% and the 5.5% market consensus. On the other hand, the renewed optimism over a possible vaccine for the highly infectious coronavirus also played a major role in supporting the market trading sentiment. Hence, the upbeat market mood undermined the demand for the safe-haven Japanese yen and was seen as a key factor that pushed the USD/JPY currency pair higher.