USD/JPY: Under pressure around eight-day low amid broad risk-off

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  • USD/JPY looks for fresh clues while taking rounds to multi-day low.
  • Trade war fears keep the driver’s seat while ignoring news of Japanese stimulus.
  • Japan’s second-tier statistics can entertain traders amid a broad risk aversion wave.

USD/JPY seesaws around 108.65 during early Wednesday morning in Asia. The quote dropped the lowest since November 22 the previous day as an escalation of the trade war fears kept the Japanese yen (JPY) on stronger footage.

Diplomats from the United States (US), including the Trade Secretary Wilbur Ross and Vice President Mike Pence, kept dimming the prospects of the US-China phase-one deal. On top of it, Trade Secretary Wilbur Ross recently suggested introduction of auto tariffs, which might hurt Japan and European Union (EU).

Market players largely ignored Reuters’ news that quotes the Prime Minister (PM) Shinzo Abe. The Japanese PM said that the government is in the final stages of announcing a big stimulus package.

With this, Wall Street registered another day of losses by the end of Tuesday while the US 10-year treasury yields trimmed nearly 12 basis points to 1.72%. Further, the S&P 500 Futures also liquidate near to 0.70% by the press time.

Moving on, Japan’s Jibun Bank Services Purchasing Managers’ Index (PMI) for November, expected 50.4 versus 49.7, is likely to offer immediate direction to the pair during initial Tokyo open. However, major attention will be on this week’s US employment data and trade war headlines.

US employment data in focus…

Given the absence of major catalysts from Japan, Friday’s key monthly jobs report from the US is now gaining more attention. As a result, today’s ADP Employment Change for November, forecast 140K versus 125K earlier, will be observed for intermediate direction. Concerning the Friday’s employment numbers, the headlines Nonfarm Payrolls (NFP) is expected to rise from 128K to 180K while Unemployment Rate and Average Hour Earnings (YoY) could remain unchanged at 3.6% and 3.0% respectively.

Technical Analysis

Unless bouncing back beyond the two-month-old rising trend line, at 108.72 now, USD/JPY drops further towards a 100-day Exponential Moving Average (EMA) level of 108.38.

 

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