- USD/JPY fades bounce off intraday low during three-day downtrend.
- Japan government announced third emergency for Tokyo, Osaka, Kyoto and Hyogo on Sunday.
- Virus woes battle vaccine hopes, geopolitical and trade headlines offer extra confusion.
- Japan’s Corporate Service Price Index came in stronger for March, Leading Economic Index for February eyed.
USD/JPY drops back towards an intraday low of 107.82, down 0.05% on a day, as markets in Tokyo open for Monday’s trading. In doing so, the yen pair portrays the market’s risk-off mood while also bearing the burden of Japan’s third state of the emergency announcement.
While respecting the state government’s push for local lockdowns, Japanese policymakers announced the third emergency in Tokyo and the western Japan prefectures on Sunday. “Under the new restrictions, large commercial facilities, theme parks and movie theaters closed across the board as requested. But with some stores sidestepping the government’s request by continuing to serve alcohol, many of those that have complied have called the measures meaningless,” per the Kyodo News.
The Japanese media further mentions, “The emergency declaration will be effective for 17 days through May 11 in a bid to curb infections during the upcoming Golden Week holidays from late April to early May.”
Japan has already announced state-wide activity restrictions but the other major Asia that is badly affected by the coronavirus (COVID-19), namely India, is yet to unveil strong measures to tame the pandemic. Even so, the US, Russia and Saudi Arabia’s help to New Delhi test the market pessimism.
Elsewhere, news that the US lifts the ban on usage of the Johnson & Johnson vaccine and the faster jabbing in Canada and Europe favor the mood. Furthermore, expectations of the Western tussle with China is likely escalated during June’s G7 and Europe’s dislike for Beijing’s strong military in the South China Sea weighs on the sentiment.
Amid these plays, S&P 500 Futures print mild losses while Japan’s Nikkei 225 drops 0.45% by the press time.
Talking about the data, Japan’s Corporate Service Price Index for March came in as 0.7% YoY versus upwardly revised prior of 0.0%.
Looking forward, USD/JPY traders may keep their eyes on the risk news ahead of February’s Leading Economic Index, expected to remain unchanged at 99.7, not to forget the US Durable Goods Orders for March, likely to rise from -1.2% to +2.5%.
Technical analysis
Unless crossing the 108.20-30 resistance region comprising 50-day SMA and monthly falling trend line, USD/JPY stays directed towards August 2018 top near 107.00.
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