Japan’s October month Retail Sales offered a surprise growth of 6.4% YoY versus market consensus of -7.7%. Further details suggest that the preliminary readings of October’s Industrial Production recovered from -14.5% forecast and -9.0% prior to -3.2% YoY.

Japan’s industrial output rose for the fifth straight month in October, signaling the economy was recovering further from the damage caused by the COVID-19 crisis. The world’s third-largest economy rebounded sharply in the third quarter from a pandemic-induced slump, thanks to surging consumption and exports, but some analysts worry about slowing growth ahead due to a resurgence in coronavirus infections.

Elsewhere, The Trump administration is poised to add China’s top chipmaker SMIC and national offshore oil and gas producer CNOOC to a blacklist of alleged Chinese military companies, according to a document and sources, curbing their access to U.S. investors and escalating tensions with Beijing weeks before President-elect Joe Biden takes office.

It was reported earlier this month that the Department of Defense (DOD) was planning to designate four more Chinese companies as owned or controlled by the Chinese military, bringing the number of Chinese companies affected to 35. A recent executive order issued by President Donald Trump would prevent U.S. investors from buying securities of the listed firms starting late next year.

On the other hand, the market’s risk-tone is also effected with the major coronavirus (COVID-19) vaccine developer’s likeliness to get the regulatory approvals from the UK, Europe, and the US. The same will fasten the process of delivery to the cure of the pandemic that has roiled 2020.  The chatters concerning US President-elect Joe Biden’s team and their next steps, mainly surrounding the fiscal stimulus also work as a catalyst in the market mood.

It should also be noted that the mixed signals relating to the Brexit deal also affect the risk catalysts while fears of the further increase in the covid numbers, until the vaccine hit the floor, offer an extra filter to the market optimism.

USD/JPY 4 Hour Chart:

Support: 103.87 (S1), 103.70 (S2), 103.49 (S3).

Resistance: 104.24 (R1), 104.45 (R2), 104.62 (R3).

While the prevailing catalysts creating favoritism for yen against greenback, we expect a bearish trend for USD/JPY.