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USD/JPY struggles around 112.00 amid fresh risk-off, Japan data

  • USD/JPY remains modestly changed following the run-up to a 10-month high.
  • Japanese yen fails to cheer the coronavirus-led risk-off, broad US dollar strength adds strength to the pair.
  • The latest updates concerning the Chinese epidemic suggest a downbeat scenario.

USD/JPY seesaws around 112.00 amid the initial minutes of the Tokyo open on Friday. The yen pair recently surged to the highest since April 2019 following the broad US dollar rally and weakness of the Japanese fundamentals.

The safe-haven isn’t risk-free…

The Japanese yen is now under pressure following the downbeat fundamentals at home. Not only the Asian economy’s sustained failures to reach 2.0% target inflation but the disappointing figures of the fourth quarter (Q4) GDP also raised doubts on the JPY’s safe-haven status. While identifying this, the International Monetary Fund (IMF) recently pushed the BOJ officials towards searching for clues. Though, the Asian central bankers and diplomats kept citing coronavirus as the immediate fear.

As per the latest data, Japan’s National Consumer Price Index (CPI) (YoY) for January matched 0.7% forecast whereas National CPI ex-Food, Energy (YoY) dropped below 0.9% forecast and prior to 0.8%. Further, the preliminary reading of Japan’s February month Jibun Bank Manufacturing PMI dropped below 49.00 forecasts and 48.8 prior to 47.6.

Traders will now await All Industry Activity Index (MoM) data for December, prior 0.9%, for further direction.

Coronavirus keeps haunting the market’s risk-tone with the latest updates suggesting increasing infections and deaths in the epicenter Hubei. The talks of cancellation of Japan’s annual wage negotiations due to the Chinese epidemic, fears cited by Germany and increasing worries of the contagion in South Korea have recently weighed on the trade sentiment.

While portraying the same, the US 10-year treasury yields stay on the back foot around 1.52% whereas Japan’s NIKKEI marks 0.25% gains to 23,535 by the press time.

Technical Analysis

The overbought RSI conditions signal the pullback to 110.80 while fresh buying is likely to take place beyond April 2019 top surrounding 112.40.

 

Japan Jibun Bank Manufacturing PMI below expectations (49) in February: Actual (47.6)

Japan Jibun Bank Manufacturing PMI below expectations (49) in February: Actual (47.6)
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