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  • USD/JPY spiking in Tokyo, extending overnight gains. 
  • US dollar picking up the safe-haven bid as economic backdrop deteriorates. 

USD/JPY is on the bid as the dollar continues to catch a safe -haven bid with constant doom and gloom headlines pertaining to the spread of COVID019 and the global economic shutdown resulting in disastrous economic data and forecasts. Overnight, USD/JPY rose to 107.86 and in Tokyo, the pair is now +0.26% with a rally in DXY of +0.15% so far. 

At the time of writing, USD/JPY is trading at 107.69, climbing from a low of 107.35 to a high of 107.72 and tracking down the overnight highs. The US dollar showed its safe-haven qualities again by rising against all G10 currencies over the day. US data was terrible and the COVID-19 death toll is ballooning, weighing heavily on US stocks.

  • Wall Street Close: COVID-19 impact on US economy has investors profit-taking

US data in lockstep with IMFs stark warnings

Earlier in the week, the International Monetary Fund issued its latest World Economic Outlook, entitled “The Great Lockdown: Worst Economic Downturn Since the Great Depression”. It projected a 2020 contraction in world growth of -3%, with US -5.9%, Euro Area -7.5%, UK -6.5%, Australia -6.7%, and China +1.2%. Today’s US data fell in line with such recessionary fears with US March Retail Sales down -8.7%, the worst monthly move on record though close to the median forecast of -8.0%. The NY Fed’s Empire State April Manufacturing Business Survey plunged a record 34.4 points to -78.2 in March (est. -35), with sharp falls in employment to -55.3 (from -1.5) and the average work week to -61.6 (from -10.6). US March Industrial Production also dropped sharply, by -5.4%, Manufacturing -6.3% and the NAHB April Homebuilder Sentiment Survey also fell by a record amount, to 30 (estimated. 55) from 72.

Meanwhile, in the latest headlines from the IMF, IMF: Asia’s economic growth this year will grind to a halt for the first time in 60 years, it warned that Asia’s economic growth this year will grind to a halt for the first time in 60 years, as the coronavirus crisis takes an “unprecedented” toll on the region’s service sector and major export destination. As for the Bank of Japan, an IMF official argued that “rate cuts to have limited effect in stimulating the economy, may hurt the financial sector.”

USD/JPY levels