USD/JPY ducks away from the 110 handle as USD softens ahead of NFPs

• USD/JPY is shying away from the 110 handle again.
• Bulls made a fresh high but the risk-on profile could be running a little too hot.

USD/JPY ranged between 109.80 and printed a fresh higher just above  110.00 in early Asia at 110.02. However, the pair is slipping away from here as markets prepare for the US data on the horizon to finish-up the week. 

USD/JPY has been better bid for the majority of this week and is back to test the bear’s commitments protecting territories in the 110 handle. We have seen a strong run in US equities despite the continued threat of the coronavirus – the yen felt the stampede nonetheless. 

As for the updates, China says there were an additional 73 deaths and 3,143 new cases of the coronavirus in China as of the end of Feb. 6, the National Health Commission said in its daily update on Friday. This brings the total number of deaths in China to 636 and the cumulative number of confirmed cases to 31,161, the government said.

Meanwhile, US 2-year treasury yields ranged sideways between 1.43% and 1.47% and 10-year yields moved between 1.63% and 1.68%. “Markets are pricing a 10% chance of easing at the next Fed decision on 18 March, and a terminal rate of 1.18% (vs Fed’s mid-rate at 1.63% currently),” analysts a Westpac explained. 

Nonfarm Payrolls on the horizon

Not a lot is expected for the pair in Asia today, but for the US session, the focus will be Jan nonfarm payrolls and hourly earnings. 

“We expect a 170k monthly gain for payrolls (consensus is 165k) after 145k in Dec and a 0.3% rise in hourly earnings in the month, 3.0%yr. While the January ADP print surprised to the upside, often it proves an inaccurate lead for the BLS release. The unemployment rate should remain at 3.5%. The Fed will release the semi-annual Monetary Report which will be presented to congress Tue/ Wed next week,”

the analysts at Westpac explained. 

USD/JPY levels