- Global growth concerns hurt the risk appetite at the start of the week.
- 10-year US Treasury bond yield is down more than 3% on the day.
- US Dollar Index stays in the positive territory after upbeat PMI data.
The USD/JPY pair traded in a very tight range during the Asian session near the 107.70 mark but came under strong bearish pressure in the European morning after the disappointing Purchasing Managers Index (PMI) readings from the euro area and Germany revived concerns over a global economic slowdown and ramped up the demand for safe-haven assets such as the JPY.
USD strength offsets the impact of risk-off flows to JPY
Following the drop to a daily low of 107.32, the pair seems to have gone into a consolidation phase around mid-107s. Although the 10-year US Treasury bond yield, which was last down 3% on the day, extended its slide during the American session to suggest that risk-off flows continue to dominate the markets, the Greenback preserves its strength to cause the pair to continue to move sideways.
Earlier today, the selling pressure surrounding the major European currencies, especially the EUR and the GBP, helped the US Dollar Index (DXY) push higher and build on last week’s gains.
Additionally, the data published by the IHS Markit revealed that the economic activity in the manufacturing and services sectors both expanded at a more robust pace than expected in September with the PMI figures coming in higher than their August readings and allowed the DXY to stick to its daily gains. At the moment, the index is up 0.2% on the day at 98.67.
On Tuesday, Jibun Bank Manufacturing PMI and Leading Economic Index data from Japan will be looked upon for fresh impetus.
Technical levels to watch for
Share
