Search ForexCrunch
  • USD/JPY trims the late-Friday pullback from 109.85 while bouncing off 109.56.
  • Risk-tone sentiment remains lighter after Friday’s US jobs report.
  • Japan’s second reading of Q1 2020 GDP can offer immediate direction, qualitative catalysts to also be the key.

USD/JPY defies the late Friday’s drop from 10-week high while trading near 109.67 ahead of the Tokyo open on Monday. While upbeat US employment data seems to have put a bid under the US dollar versus the safe havens, the broad risk-on sentiment could be considered as a major catalyst for the pair’s latest run-up.

Read: What you need to know as markets open: Risk-on as investors cheer astonishing NFP

The US jobs numbers for May triggered the market optimism after the headlines Nonfarm Payrolls registered a surprise increase of 2,509K versus the forecast -8,000K. Also increasing the traders’ enthusiasm was a lesser than expected Unemployment Rate of 13.3% as well as upbeat employment figures from Canada. With the recovery in key markets statistics, investors considered that the economic restart will be quickly able to overcome the coronavirus (COVID-19) losses.

Not only the US and Canadian employment data but upbeat trade numbers from China and calls of receding protests in the US also added to the market’s optimism. Furthermore, AstraZeneca and Gilead are about to merge and boost the efforts of finding the cure to the pandemic, as per Bloomberg, which in turn strengthened the market’s risk-tone sentiment.

On the contrary, the US-China trade tussle remains on the table as US President Donald Trump recently pushed to the European Union and China for increasing the demand and cutting tariffs on the American lobsters. However, China’s Global Times, relying on the ex-trade official, poured cold water on any such expectations.

Amid all these plays, S&P 500 Futures gain over 0.50% to 3,200 while copying Friday’s Wall Street performance.

The pair traders may now keep eyes on the second revision on Japan’s Q1 2020 GDP, expected -0.5% versus -0.9% prior. While the initial readings marked the return of a technical recession, any recovery could have a less positive impact on the Japanese yen unless the number comes above 0.0%.

Technical analysis

Unless breaking 110.00 round-figure, bulls are less likely to enter fresh trades. However, the bears might also stay away till the pair remains above April high of 109.38.