USD/JPY picks up the bids below 106.00 amid risk-off mood

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  • USD/JPY struggles to carry the previous day’s declines while bouncing off the weekly low near 105.60.
  • Deadlock over the US stimulus, Sino-American tension supersedes upbeat US data.
  • Japanese PM’s failure to tame coronavirus (COVID-19) also fails to propel the quote.
  • US ADP Employment Change, ISM Non-Manufacturing PMI will be the key statistics to watch.

USD/JPY recovers from the weekly bottom of 105.58 to 105.75 as Tokyo session begins Wednesday’s trading. The quote refrained from respecting the upbeat US data and pessimism surrounding Japanese PM Shinzo Abe’s leadership earlier. The reason could be traced from the American Senators’ failures to deliver the much-awaited stimulus plan and the recent tussle between the US and China.

Risk becomes the key…

American policymakers keep jostling over the aid package, crossing the expiry of unemployment claim benefits. The issue becomes worrisome as the Senators show no sign of agreement over the trillion-dollar plan despite being closer to the August vacation.

US President Donald Trump also contributes to the USD/JPY weakness while keep exerting pressure on China’s TikTok to have an American owner if it wants to stay viable. The same joins chatters over the consulate closures and a devastating blast in Beirut to weigh on the risk-tone sentiment.

As a result, the S&P 500 Futures drop 0.10% to 3,296 despite Wall Street’s upbeat performance the previous day. Further, Japan’s Nikkei 225 also prints 0.67% losses while taking offers around 22,423 by the press time.

It’s worth mentioning that Japan’s PM Shinzo Abe recently came under fire due to the alleged mishandling of the coronavirus (COVID-19) pandemic at home, as per Bloomberg. Mr. Abe has been a true supporter of easy money policy and considered brave to take unconventional measures and keep the Asian major’s economy afloat. Hence, any negative news for the national leader should have ideally propelled the quote. In doing so, upbeat prints of Japan’s Jibun Bank Services PMI for July, to 45.4 from 45.00, seems to have been ignored.

Although risk catalysts are likely to remain on the driver’s seat, US ADP Employment Change and ISM Non-Manufacturing PMI data for July will be closely followed to ascertain the latest recovery in American statistics. Forecasts suggest the ADP figures recede from 2369K previous mark to 1500K whereas the key services activity gauge may ease to 55.00 from 57.1 prior.

Technical analysis

While a daily closing beyond the June month’s low of 106.07 becomes the key for the bull’s entry, sellers may remain cautious until the quote stays beyond 105.00.

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