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USD/JPY: Yen bolstered on awful China PMI, risk-off at full steam

FXStreet (Mumbai) - The USD/JPY pair met fresh supply near 120.20 region and dropped sharply to lows below 120 handle following the release of the much awaited Chinese manufacturing PMI data which disappointed markets big time.

Yen spikes on China PMI miss

Currently, the USD/JPY pair trades -0.28% lower at fresh session lows of 119.80, dumping nearly 40 pips on the data. The Japanese yen erased losses and jumped to gains versus the US dollar after awful China manufacturing gauge release spooked markets and reinforced risk-aversion across the board.

Asian indices were trading deep in the red as China PMI miss re-ignited concerns over China’ economic concerns, with investors flocking to safety-assets such as the yen. Australia’s ASX tanked -1.75% while Shanghai Composite slipped -1.30%.

The Caixin-Markit China Manufacturing Purchasing Managers' Index (PMI) fell to a preliminary 47.0 in September from 47.3 last month, hitting a 6-1/2 year low.

Looking ahead, the pair is likely to remain pressured amid a renewed bout of risk-off trades as markets digest the latest China PMI report.

USD/JPY Technical levels to consider

To the upside, the next resistance is located 120.32 (Today’s High) levels and above which it could extend 120.64 (Sept 22 High). To the downside immediate support might be located at 119.38 (Sept 15 Low) below that at 119.03 (Sept 18 Low) levels.

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