USD/JPY trims recovery gains, back below 108.00 handle

   “¢   Fresh US-China trade optimism helps regain positive traction during the Asian session.
   “¢   Fading safe-haven demand provided an additional boost and remained supportive.  
   “¢   The prevalent USD bearish bias capping gains ahead of the US monthly jobs report.

The USD/JPY pair struggled to build on its attempted recovery move and quickly erased around 50-60 pips from Asian session tops, slipping back below the 108.00 handle.

Renewed hopes that the upcoming US-China trade talks would make some progress, coupled with initial signs of stability in equities dented the Japanese Yen’s safe-haven status and initially assisted the pair to build on the overnight strong rebound from the flash crash low to over nine-month lows.  

The pair touched an intraday high level of 108.45 but quickly ran out of steam amid absent US Dollar buying interest. The USD bulls seemed unimpressed by Thursday’s upbeat ADP report, rather reacted negatively to dovish comments by Dallas Fed President Robert Kaplan and disappointing US ISM manufacturing PMI.

Despite the pull-back, the downside remained cushioned, at least for the time being, as traders now seemed reluctant to place any aggressive bets and preferred to wait on the sidelines ahead of today’s important release of the closely watched US monthly jobs report, popularly known as NFP.

The US economy is anticipated to have added 177k new jobs in December, while the unemployment rate is seen holding steady at 3.7%. The key focus, however, will be on wage growth data, foreseen to post another month of solid growth, which should provide some meaningful impetus later during the early North-American session.

Technical levels to watch