USD/JPY: Price consolidates close to New york highs in Asia ahead of US GDP

• USD/JPY rallied overnight and has stalled ahead of key US data today.
• Beyond the 109.00 level, the pair could extend its advance toward the 110.00 figure.

USD/JPY shot up from 108.04 to a high of 108.75 and is consolidated around the highs in Tokyo's opening hour. The U.S. dollar picked up a bid and the DXY rallied to the highest levels since mid-June with eyes now on the 98 handle ahead of tomorrow's U.S. Gross Domestic Produce and next week's Federal Reserve interest rate decision. 

US 10-year yields rose 4bp to 2.084%, following stronger US durable goods orders data. However, wholesale and retail inventories rose less than expected. Looking ahead for the day, in the US, it is expected that GDP growth will have slowed in data that will reval Q2 advance Gross Domestic Product. 

"The Q1 result was boosted by a build-up of inventories. Come Q2, this situation looks set to reverse. Outside of inventories, domestic demand is set to strengthen, thanks to a near doubling of consumption growth, and as government spending continues to provide support. Business investment should also grow, but likely at a softer pace than in Q1," analysts at Westpac explained. 

Valeria Bednarik, the Chief Analyst at FXStreet, noted that the USD/JPY pair broke above the 61.8% retracement of its July’s decline, with little in the way now toward the top of the month at 108.98:

"In the 4 hours chart, the pair has soared above a congestion of moving averages, which stand around the 50% retracement of the same decline around 108.10. The 20 SMA, however, is advancing above the larger ones. Technical indicators in the mentioned chart have settled at daily highs, with the RSI stabilizing in overbought territory. Beyond the 109.00 level, the pair could extend its advance toward the 110.00 figure."