- U.S Dollar Sell-Off
- Japan Economy Severe State
- Risk Aversion Spike Concern
The U.S dollar was on the back foot against the Japanese Yen, Thursday morning. The USD/JPY touched one-week lows even as Bank of Japan Governor Haruhiko Kuroda reiterated Japan’s economy is in an extremely severe state.
Amidst the sell-off, the USD/JPY continues to trade in a tight trading range, opting to oscillate between the 107.6 and 106.6 levels.
Time : 07-09-2020
Pivot : 107.38
Technical View : Long Above 107.18
Target : 106.98 – 106.64
Comments : Bearish
Last Price : 107.31
The Japanese Yen continues to strengthen against the dollar amidst concerns about the health of Japan’s economy. The economy has plunged deeper into recession as the COVID-19 pandemic continues to take a toll on the economy’s key sectors.
The economy has already posted two consecutive quarters of contraction, with unemployment levels have inched higher. Bank of Japan has already confirmed plans to continue with easing programs, all in the effort of countering economic fallout from the coronavirus pandemic.
The Yen, on the other hand, has continued to strengthen against the majors on the BOJ reiterating the economy will recover with accommodative financial conditions supplemented by government stimulus packages.
Risk Sentiment Spiral
The U.S dollar, on the other hand, lost ground against the majors resulting in the USD/JPY Pair edging lower as data showed the U.S recorded its highest cases of COVID-19 infections. Reports that the U.S recorded 60,000 new cases, on a single day, set a new record with more than 3 million Americans infected with the virus.
The dollar weakness persisted as Dr. Fauci reiterated that the coronavirus’s Phase 3 vaccine trials will start at the end of July. Optimism about a coronavirus vaccine continues to quash risk sentiment sending traders into riskier currencies.
Analysts at Westpac reiterating that the downward trend on the initial jobless claims is likely to continue edging higher also raised hopes of accelerated economic recovery. The dollar that has strengthened in recent past concerns about the potential impact of a second wave of coronavirus infections continues to edge lower against the majors.
In a thin economic calendar day, traders will be on the release of Wholesale Inventories for May and the FED Bostic speech later in the day.