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  • S&P 500 drops to lowest level since late March.
  • 10-year US T-bond yield loses more than 1%.
  • US Dollar Index slumps to multi-week lows on Friday.

Following a recovery attempt toward the 110 handle during the European trading hours, the USD/JPY pair lost its traction in the last few hours and fell to 109.50 area with the flight-to-safety, once again, taking control of the market action and ramping up the demand for the safer JPY. As of writing, the pair was down 0.19% on a daily basis at 109.56.

The lack of positive headlines coming out of today’s trade talks in Washington seems to be weighing on the market sentiment. Following reports of Chinese Vice-Premier having left the U.S. Trade Representative’s (USTR) office, Treasury Secretary Mnuchin told reporters that talks for the day were concluded and they were “constructive.” Mnuchin didn’t deliver any further comments and didn’t respond to questions from the press.

Reflecting the dismal market mood, the Dow Jones Industrial Average and the S&P 500 are both losing 1.3% on the day while the Nasdaq Composite is erasing 1.7%. Furthermore, the 10-year T-bond yield, which generally shows a strong positive correlation with the USD/JPY pair, was last down 0.8%.

Meanwhile, today’s uninspiring inflation data from the U.S. weighed on the greenback and allowed the pair to push lower in the session. As of writing, the US Dollar Index is losing 0.2% on a daily basis at 97.22.

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Technical levels to watch for