USD/JPY is trading at 105.49 between a range of 105.46 and 105.61, slightly down on the day in a weak USD environment.
USD/JPY has been unable to maximise on the late July spike to the 106 area and instead has been a fade which is opening prospects for a push back towards the 105.20s as downside momentum builds.
Overnight, the US dollar was about flat against JPY but otherwise down against all G10 currencies over the day.
US 2-year Treasury yields, did, however, rise from 0.11% to 0.12 and the 10-year yield rose from 0.51 to 0.55%.
US data mixed but proving July’s slump
The main focus was on the US jobs data yet again. The ADP private payrolls grew by 167k in July, much less than the 1200k expected. June was revised substantially higher though, from 2369k to 4314k.
This print will affect expectations for non-farm payrolls on Friday, but confidence in the ADP’s signal may be coming under scrutiny given two huge revisions to data for May and June,
analysts at ANZ Bank explained.
In other data, the ISM services activity beat expectations for July. The index up to 58.1 from 57.1 (and vs 55.0 expected).
New orders surged to 67.7 and business activity rose to 67.2. But employment fell back to 42.1, consistent with the recent rise in both initial and continuing claims data. All available evidence is pointing to a downside risks to the 1.5m consensus for July NFP on Friday,
the analysts at ANZ warned.
This will tally up with the slowdown in high-frequency data seen throughout July.
Meanwhile, Federal reserve VC Clarida was somewhat optimistic when speaking overnight.
He sees the US economy returning to pre-pandemic levels by end-2021 and said a fiscal package could provide important support.
Meanwhile, however, colleague and Cleveland Fed President Mester said that the labour market is weaker than headline payrolls suggests and that over half the business contacts in her district are “meaningfully altering their plans in response to the rise in virus cases, including reducing employment or employee compensation or cancelling or postponing planned capital expenditures.”
USD/JPY levels
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