- The USD / JPY remains under pressure in a large risk, benefiting from the recent weakness of the USD.
- Doubts about the Fed rate, commercial / viral problems keep the pair heavy.
- Machine tool orders in Japan, unemployment claims from the United States to decorate the calendar.
- Qualitative catalysts will be the key to short-term orientation.
USD / JPY fell to 106.85, intraday low of 106.82, in the middle of Tokyo’s initial opening time on Thursday. While the broad wave of risk aversion has exerted downward pressure on the pair for the past two days, the latest weakness can be attributed to American dollar withdrawal.
Despite the Fed efforts of policy makers to exclude negative interest rates, President Donald Trump said, “I like negative interest rates.” An addition to the greenback declines could also be comments from the US Secretary of the Treasury, Steve Mnuchin who sowed concern for the current quarter while showing readiness to take action.
Regarding risks, wave 2.0 of the coronavirus (COVID-19) is pushing world diplomats to rethink their plans to reopen economies.
In addition, the pessimism surrounding the American-Chinese conflict also weighs on the risk tone of the market. President Trump recently blocked investments in Chinese stocks to which the dragon nation has reacted severely. Earlier, the Republican leader ruled out renegotiating the phase 1 deal while alleging China for the virus epidemic.
It should also be noted that U.S. President Trump can impose sanctions on the Asian leader if the U.S. Senate passes a bill that allows the Republican leader to do so if the dragon nation does not cooperate in the virus investigation.
While depicting the wave of risk aversion, yields on 10-year US Treasuries extend their southern run to 0.64%, while the Japanese NIKKEI also drops 0.55% to 20,160 when the press.
In the future, traders will keep their eyes on the preliminary reading of orders for machine tools from Japan for April, before -40.8%, as well as trad / virus stocks, for immediate direction. However, jobless claims in the United States will be key for the rest of the day.
The breakout of the 10-day EMA pair of 107.00 seems to drag it towards the monthly low close to 106.00. However, buyers remain skeptical unless breaking a 50-day EMA level of 107.70 on a daily close basis.