USD/JPY flirting with daily lows, just above mid-108.00s

• Disappointing US durable goods orders data added to intraday selling bias.
• Risk-on mood weighed on the JPY’s safe-haven status and helped limit losses.
• The US Vice President Pence’s speech on China eyed for a meaningful impetus.

The USD/JPY quickly reversed an intraday bullish spike to weekly tops and refreshed daily lows, around mid-108.00s following the release of disappointing US macro data.
 
Data released on Thursday showed the headline durable goods orders tumbled 1.1% in September, marking its first decline in three months and reflected widespread weakness in the manufacturing sector. Excluding transportation items, orders slipped a smaller 0.3% but were still weaker than consensus estimates pointing to a fall of 0.2%.

Downside remains cushioned

The data reaffirmed that the prolonged US-China trade conflict has disrupted the global economy and resulted in slower growth. This further cemented market expectations that the Fed will go ahead and cut interest rates further at its upcoming monetary policy meeting on October 29-30, which eventually exerted some downward pressure on the pair.
 
The downside, however, remained cushioned amid a positive mood around equity markets, which tends to undermine the Japanese Yen’s perceived safe-haven demand. This coupled with a turnaround in the US Treasury bond yields extended some additional support, rather assisted the pair to quickly bounce off daily lows set in the last hour.
 
With Thursday’s key data out of the way, investors now look forward to the US Vice President Mike Pence’s speech on China, which might influence the broader market risk sentiment and produce some meaningful trading opportunities on Thursday.

Technical levels to watch