- USD/JPY consolidates near 109.50 on Wednesday.
- US dollar gains strength as market risk sours.
- Yen remains subdued over mixed economic data.
The USD/ JPY pair trades cautiously on Wednesday morning in the Asian session. The Pair is hovering in a narrow trading band of 109.20-109.60
At the time of writing, USD/JPY trades at 109.50, with 0.01% gains for the day.
The US Dollar Index( DXY), which tracks the performance of the greenback against six major rivals, remains above 90 level with 0.20% gains.
Investors rushed to the greenback in a time of uncertainties on its safe haven appeal. In the latest development, the Biden administration said that it would set up a ‘strike force’ to look out for specific violations that contribute to a ” hollowing out” of supply chains. The Commerce Department said that it is considering a Section 232 investigation into the national security impact of neodymium magnet imports largely from China.
Meanwhile, the US told Iran on Tuesday that it must let the UN atomic agency continue to monitor its activities as per the agreement that has been extended until June 24 or put wider talks on reviving the Iran nuclear deal at risk.
In addition to that, the US Senate has voted to approve the US Innovation and Competition Act, a bill of more than $200b to compete with China.
On economic data, the US trade gap narrowed to $68.9b in April from a record high $75 billion in the previous month.
On the other hand, the Japanese yen gained some traction after mixed economic data released on Tuesday, however, gains were limited. The economy shrank 1.0% in Q1, against the market consensus at 1.2%. On an annualized basis the economy retreated by 3.9% as compared to the market expectations at 4.8%. The policymakers are still worried about capital spending and private consumption, which remained weak. The slower vaccination program remained a bottleneck in the economic recovery.
As for now, in the absence of any major fundamental catalyst, the dynamic around the US dollar and market risk sentiment continue to influence the pair’s performance.
USD/JPY Additional Levels
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