- Flight-to-safety dominates the markets in the NA session.
- Major equity indexes in the U.S. down over 1%.
- US Dollar Index breaks above 95.80 on Thursday.
After spending the majority of the day in a tight range near mid-112s, the USD/JPY came under pressure in the NA session as the sharp fall witnessed in major equity indexes in the U.S. ramped up the demand for safe-havens such as the JPY. The pair, which touched a daily low at 112.08 in the last hour, was last seen trading at 112.13, losing 0.5% on a daily basis.
Wall Street volatile week highlighted by wild swings since Monday continued on Thursday. After starting the day in the red, major equity indexes extended their losses as the disappointing earning figures from industrials revived concerns over the potential negative impact of trade tariffs. Additionally, falling crude oil prices weighed on the energy sector and the widening Germany – Italy 10-year bond yield amid the Italian budget crisis spread dragged financials lower. As of writing, both the Dow Jones Industrial Average and the S&P 500 were down 1% on the day while the Nasdaq Composite was losing 1.7%.
On the other hand, the Fed’s hawkish stance and upbeat data from the U.S. provided a boost to the greenback on Thursday to help the pair limit its losses. At the moment, the US Dollar Index is at its highest level in nine days at 95.85.
- US: Conference Board Leading Economic Index increase 0.5% in September to 111.8.
- Philly Fed Manufacturing Activity Index edges down to 22.2 in October vs 20 expected.
- US: Initial weekly jobless claims decreased by 5,000 to 210,000.
Technical levels to consider
With a daily close below 112 (psychological level/daily low), the pair could extend its losses toward 111.60 (100-DMA) and 111.10 (Sep. 12 low). On the upside, resistances could be seen at 112.70 (daily high), 113 (20-DMA) and 113.40 (Oct. 9 high).
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