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USD/JPY rebounds to 108 area despite falling US stocks

  • Wall Street opened lower on Monday and continue to push lower.
  • 10-year US Treasury bond yield erases more than 3%.
  • US Dollar Index climbs above 98.50 in the second half  of the day.

The USD/JPY started the week under pressure as reports of drone and missile attacks on Saudi oil facilities triggered an intense flight-to-safety during the Asian trading hours. In the second half of the day, however, the broad-based USD strength allowed the pair to stage a rebound. As of writing, the pair was down 0.05% on the day at 108.00.

Crude oil prices rose sharply on this development and the barrel of West Texas Intermediate is now trading above $61, adding more than 11% on a daily basis. Concerns over the potential negative impact of surging crude oil prices on the global economic growth ramped up the demand for traditional safe-havens on Monday.

The 10-year US Treasury T-bond yield is now losing more than 3% on the day while Wall Street’s three main indexes are all down around 0.5% to confirm the dismal market mood.

Greenback gathers strength on Monday

Despite the souring sentiment, however, the JPY struggles to outperform the Greenback as the heavy selling pressure surrounding major European currencies such as the EUR and the GBP allowed the currency to gather strength. The US Dollar Index (DXY), which tracks the USD’s value against a basket of six major currencies, recovered all of last week’s losses today and was last up 0.8% on the day at 98.65.

Meanwhile, the only data from the US today showed that the business activity in the manufacturing sector in the NY area expanded at a softer pace than expected with the  Federal Reserve Bank of New York’s Empire State Manufacturing Survey’s  headline General Business Conditions Index falling  to 2 in September from 4.8 in August.  

There won’t be any macroeconomic data releases from Japan during the Asian session and the risk perception is likely to continue to impact the pair’s trading  action.  

Technical levels to watch for


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