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  • 10-year US Treasury bond yield erases nearly 3% on Friday.
  • European stocks trade in red as risk appetite weakens.
  • Coming up: Nonfarm Payrolls (NFP) report from US.

The USD/JPY pair came under renewed selling pressure in the last hour and dropped to a fresh daily low of 109.67 pressured by risk-off flows. As of writing, the pair was trading at 109.72, erasing 0.25% on a daily basis.

The upbeat market sentiment made it difficult for the JPY to find demand during the first half of the week and allowed the pair to rise to its highest level in two weeks at 110.03. However, the sour mood on Friday seems to be weighing on the pair. Disappointing Industrial Production figures from Germany seems to have reminded investors of the fragile global economy. 

Major European equity indexes on Friday are losing between 0.3% and 0.6% on Friday and the 10-year US Treasury bond yield, which gained nearly 10% during the first half of the week, is losing 2.7% to reflect the flight-to-safety.

Focus shifts to US NFP data

In the meantime, the US Dollar Index is clinging to modest daily gains near the 98.60 mark ahead of the key Nonfarm Payrolls (NFO) data.

Previewing the NFP report, “the main event of the day is the US jobs report for January, which we expect to continue to paint an upbeat picture of the US labour market situation and we look for growth in non-farm payrolls of 175,000 and wage growth of 3.0% y/y,” said Danska Bank analysts.

US NFP Preview: 6 Major Banks expectations for January payrolls report.

Technical levels to watch for