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The Treasury in October said the government had accumulated a budget shortfall of $483 billion, or 2.8% of gross domestic product in the 12 months through September 30, the least since 2008. The Congressional Budget Office said in August that it expects the deficit to shrink to 2.6% of GDP this fiscal year.
Meanwhile in Japan, April's sales tax increase continues weighing on consumer sentiment
in Japan, as Cabinet Office survey revealed confidence among households fell for a fourth consecutive month in November. The sentiment index, which includes views on jobs and incomes, came in at 37.7, the lowest level since April and down from 38.9 in October. The index measuring employment levels declined by 1.9 points to 42.8 in November and the "willingness to buy durable goods" index fell 1.1 points to 35.4.
US data could add to volatility
The first three days of the week were relatively calm; however, in Thursday and Friday that might change. The main cause for the additional turbulence could be the US core retail sales and unemployment claims that both are expected to worsen and tomorrow US PPI and preliminary UoM inflation expectations will be released.. © Dukascopy Bank SA
USD/JPY continues to reach new highs
At the first half of the year USD/JPY was trading almost completely flat, as it traded around the 102 level. However, at the second part of August the Greenback started to outperform the Japanese peer rather heavily. Currently, the pair has breached the 120 mark and for the time being it is supported by the support line and monthly R1 near the 121 mark, if this level holds then we might see the pair climbing even higher. Nonetheless, in case these levels do not hold the selling pressure then the pair is likely to slide below the psychological level of 120.Daily chart
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The US Dollar's weakness is spuring the Japanese Yen's recovery, as of now USD/JPY has approached the 118 level, meaning that it has lost almost 400 pips in the week. There is a relatively strong support level (monthly PP and weekly S2) at 116.75/56 that could potentially halt the current retreat and give the necessary bullish impetus for a rebound.
Hourly chart
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USD/JPY spreads (avg, pip) and volatility
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