USD/JPY sinking in the Tokyo opening hour on rising stocks and vaccine hopes

• USD/JPY is sliding in Tokyo, unstuck on pure dollar weakness as it gaps down on the hourly DXY chart.
• Vaccine hopes keep equity markets printing fresh all-time highs, weighing on the greenback. 

At the time of writing, USD/JPY is trading at 104.45 and between a high of 104.60 and 104.42 the low, failing to convince in the mid 104 handle and extending the overnight losses.

The pair got off to a strong start in mid-London trade when it rallied from 104.60 to 105.13 on vaccine development headlines but later faded to 104.55.  

Positive news on Moderna's (MRNA) COVID-19 vaccine trial added to the upside for stockmarkets Monday which were already buoyed by economic growth data from Asia. 

US equity futures were rallying 1% and regional equities were already higher on the back of the China October industrial production rising 6.9%yoy, which was a robust pace even by pre-pandemic standards.

Asian stocks opened firmer on Tuesday after the S&P 500 and Dow Jones indexes hit record highs with Moderna announcing Monday that its vaccine candidate was found to be 94.5% effective in preventing the coronavirus. By comparison, Pfizer (PFE) reported its candidate was demonstrably 90% effective.

Australia's S&P/ASX 200. AXJO rose 0.6% in early trading, while Hong Kong's Hang Seng index futures HSI HSIc1 gained 0.27%. Japan's Nikkei 225 NI225 climbed 0.5%.

Additionally, despite the virus spread, President-elect JoeBiden's administration apparently doesn't favour a nation-wide lockdown in combating the virus, with two of three of Biden's COVID-19 advisors coming out against such a shutdown.

Meanwhile, US equities closed at record highs and bond yields rose slightly, despite the defensive US dollar falling against risk-sensitive currencies.

US 2-year Treasury yields ranged between 0.17% and 0.18%, while the 10-year yield popped up 4bp to 0.93% on the vaccine headlines before steadying at 0.90%.  

As for data, the New York Fed’s November Empire Manufacturing Index fell for the second consecutive month to 6.3 from 10.5.

New orders fell back to 3.7 from 12.3 and shipments dropped sharply to a five-month low at 6.3 from 17.8.

''The index raises concerns about the pace of regional manufacturing, but its accuracy in gauging national manufacturing momentum is being debated, given that it has lagged other regional surveys recently,'' analysts at Westpac explained.

''The employment sub-index rose a modest 2 points to 9.4. The future business outlook was encouraging, rising slightly to 33.9 from 32.8,'' the analysts noted.