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USD/JPY clings to small daily gains above 109.50

  • 10-year US Treasury bond yield registers modest gains.
  • Wall Street looks to open in positive territory.
  • US Dollar Index stays above 97.80 ahead of PMI data.

The USD/JPY pair lost more than 100 pips this after rising to its highest level since May at 110.30 last Friday as heightened fears over coronavirus spreading and becoming a global epidemic allowed JPY to find demand as a safe-haven. With the market sentiment improving slightly, however, the pair recovered a small portion of its weekly losses on Friday and was last up 0.12% on the day at 109.62.

Risk aversion softens on Friday

On Thursday, the World Health Organisation's (WHO) director-general, Tedros Adhanom Ghebreyesus, noted that coronavirus has not yet become a global health emergency and added that they were not yet recommending any broader restrictions on travel or trade. Additionally, "it's still too early to draw conclusions on how severe the virus is," a spokesman for the WHO said on Friday, to help the market sentiment improve.

The 10-year US Treasury bond yield, which closed the last three days in the negative territory, was last up 0.3% on the day and the S&P 500 futures were adding 0.25% to suggest that Wall Street's main indexes are likely to start the day in the positive territory.

In the meantime, the US Dollar Index is edging higher toward the 98 mark ahead of the IHS Markit's Manufacturing and Services PMI data later in the session to keep the bullish momentum intact.

Technical levels to watch for

 

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