Search ForexCrunch
  • USD/JPY is flashing red with investors awaiting China trade data for March. 
  • A big miss on expectations will likely bolster risk-off moves, sending JPY higher. 
  • Corporate earnings are likely to put the focus back on the economic woes brought on by the coronavirus.

USD/JPY is on the offer on Tuesday with the anti-risk yen drawing bids ahead of the China data and corporate earnings season, which is likely to show the true extent of the impact of the coronavirus outbreak on the economy.

The currency pair is trading in the red near 107.57 at press time, having dropped by 0.55% on Monday.

China’s trade data scheduled for release sometime in the next few hours is expected to show the outbound shipments or exports from the world’s second-largest economy tanked by 15% in March in yuan terms, following  February’s 17.2% decline. Meanwhile, imports are forecasted to have dropped by 8% versus -4% in March.

A weaker-than-expected data could trigger accentuate the risk-off moves in the global markets and send the JPY higher.

Earnings season is set to kick off on Tuesday with heavyweights like JP Morgan Chase, Wells Fargo and Jhonson&Jhonson set to reports in the US morning.

The global equity markets witnessed a solid recovery rally in the last two weeks, largely due to the trillions of dollars of monetary and fiscal stimulus lifelines launched by the Federal Reserve and the US government.

Some observers believe the liquidity-driven rally has lost touch with the reality and could soon unravel as the earnings season is likely to shift the focus back on the economic woes, mainly the demand destruction, brought on by the coronavirus outbreak.

As a result, any uptick in USD/JPY brought on by a potential upbeat China data could be short-lived.

Technical levels