- Japan Household Spending Data
- U.S Economic Recovery Optimism
- Dollar Weakness
USD/JPY pair edged higher Tuesday morning as the Yen weakened on weak household spending data. The bounce-back came at the backdrop of massive sell-off. The greenback came under pressure amidst a plethora of positive economic releases that affirmed economic recovery in the U.S.
The USD/JPY has so far struggled for direction in recent weeks, opting to trade in a tight trading range of between 106.60 and 107.53. Weakness in the greenback and the Yen has curtailed movements in either direction.
Time : 07-07-2020
Pivot : 107.42
Technical View : Long Above 107.62
Targets : 107.72 – 107.82 – 107.87
Comments : Weak Bullish
Last Price : 107.77
The Yen came under pressure as data showed the average overtime pay in May dropped 25.8% as the economy reeled from the effects of the COVID-19 pandemic. The decline represented the biggest contraction in more than seven years, according to the labor ministry.
The Yen weakened against the Dollar, sending the USD/JPY higher as the rate of decline in the labor market marked a third consecutive month of pay contraction. Over time, working hours also fell 29.7%, alluding to slow business uptake in the economy. A slump in overtime pay also saw household spending slump 16.2% in May, the quickest pay decline since the data became available in 2001.
A weak dollar is one of the catalysts limiting strong upside movements on the USD/JPY. The U.S dollar has come under pressure in recent weeks as a plethora of solid economic releases continues to affirm growth in the U.S economy amid the COVID-19 crisis.
U.S Economy Resiliency
After an impressive job data that showed the U.S economy added 4.8 million jobs in June, ISM Manufacturing data have also come better than expected, affirming recoveries in the manufacturing sector. Similarly, the ISM Non-Manufacturing Business Survey Committee came in at 57. 1, on Monday, representing an 11.7% increase. The increase in affirms growth in the non-manufacturing sector.
A string of positive economic data worldwide has eased fears in the market, conversely sending the Dollar lower against the majors. On Tuesday, a number of speakers from the Federal Reserve are poised to hit the wires likely to sway traders sentiments on the U.S dollar conversely USD/JPY price action.