- The USD / JPY is sticking to modest gains, although it struggled to get through the SMA at 50 days.
- The USD failed to hold on to its first gains and stayed on the post-American defensive data.
- Investors now seemed reluctant to place directional bets in front of the BoJ on Friday.
USD / JPY traded with a positive bias at the start of the North American session, although it was down about 20 pips from the top of the daily swing.
The pair continued their fight to decisively clear the 50-day SMA hurdle and experienced a slight intraday retreat amid further weakness in the US dollar. Wednesday’s FOMC meeting minutes, coupled with declining yields on US treasury bills, prompted some USD to sell at higher levels and proved to be one of the key factors that capped the USD / JPY pair.
The USD remained on the defensive after the publication of a rather unimpressive American macro release. According to data released on Thursday, about 2.44 million people claimed unemployment benefits during the week ending May 16. In addition, the Philly Fed Manufacturing index improved slightly, going from -56.6 to -43.1 in May, against -41.5 expected. .
Meanwhile, concerns over worsening US-Chinese relations have overshadowed recent optimism over the reopening of world economies. In addition, growing fears about the second wave of coronavirus infections have weighed on investor sentiment. The nervousness was evident from a softer mood around the global stock markets benefited the Japanese yen perceived as a refuge.
It should be recalled that US President Donald Trump on Wednesday accused China once again of mismanaging the coronavirus epidemic. In addition, the US Senate has passed a bill that could prevent some Chinese companies from selling stocks on the US stock exchanges and has fueled fears that the US-China trade deal between the two sides reached last year collapse.
The negative factors, to a greater extent, have been offset by speculation that the Bank of Japan may introduce extraordinary easing measures. Therefore, the main focus will remain on the unexpected BoJ meeting on Friday, which could provide a significant boost. Traders are likely to wait for a lasting breakthrough on a three-day trading range before placing directional bets.