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USD/JPY headed to 112.00 amid risk-aversion?

  • Nikkei 225 index trades with moderate losses.
  • USD weakens on the US Govt shutdown risks and bad ISM services.
  • North Korea news back on the wires.
  • US jobs data - key.

Amid wide-spread risk-aversion and broad-based US dollar weakness, the USD/JPY pair is seen printing session lows of 112.37, as the bears head towards 112 handle ahead of the US ADP jobs report.

USD/JPY:  Risk-off at full steam

The spot remains on the offers, mainly driven by the renewed selling seen around the greenback against its major peers after the White House spokeswoman Sarah Sanders said that the government shutdown was always a possibility. Government funding is set to expire Friday.

Additionally, the sentiment around the buck remains weighed down by downbeat US ISM non-manufacturing PMI report combined with increased cautiousness ahead of the Republican-led Senate vote on the tax bill later this week.

On the JPY-side of the equation, the Yen remains in demand across the board amid risk-off market profile, reflected by negative Asian equities and oil prices, in the wake of the latest North Korea headlines.

Moreover, the latest comments by the BoJ board member Masai were largely ignored by the major, as attention now turns towards the US ADP jobs and IBD/TIPP Economic Optimism data for fresh trading opportunities ahead of the key NFP report due out on Friday.

USD/JPY Technical View

Jim Langlands at FX Charts writes: “As before, a nimble stance is required, with the short-term momentum indicators looking a little heavy, while the dailies are leaning slightly higher now and buying dips is preferred for the medium term. Look for a range of 112.25/113.10 to cover it today, with further consolidation likely ahead of the US Jobs report, Friday.”


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