- USD/JPY bucks the recent uptrend amid risk-off moves.
- Coronavirus updates concerning the US, Italy increase the fears.
- The US is expected to roll out a massive stimulus in response to the pandemic, no announcement is out till now.
USD/JPY snaps four-day winning streak while declining to 110.80 amid the initial minutes of Monday’s Asian session. The yen pair takes clues from the surge in coronavirus figures from the US and Italy. Also likely to exert downside pressure on the pair are comments from the Fed official and US President Donald Trump as well as an absence of the Trump administration’s much-awaited stimulus.
Read: What you need to know for the open: COVID-19 lockdown and world recession looms
The worsening case in the US…
The US now has the third-highest numbers, after Italy and China, as far as the coronavirus (COVID-19) is concerned. While the cases neared 24,000 during the weekend, the death toll surged to 306 on Saturday.
The epidemic has already started weighing on the economics of the world leader and is likely to have a fierce impact while going forward. The St. Louis Federal Reserve President James Bullard expects the second quarter (Q2) GDP to shrink by 50% in addition to the surge in Unemployment Rate to 30% due to the current coronavirus pandemic.
US President Donald Trump refrains from any stimulus news while saying that the US is marshaling every resource available to fight the “Chinese virus”.
Read: US President Trump and COVID-19 task force pressser
While the Fed has tried all it could do, also promised to stay ready for further moves, the Trump administration’s ‘massive’ economic response to the disease is still looming in the Senate. The package is anticipated to offer $3,000 to each of the families while also helping the Fed to infuse $4 trillion of liquidity into the markets.
On the positive side, 500,000 respirators are on the way to New York and Seattle, which in turn could defy the previous calls of the shortage of medical supplies.
That said, the market’s risk-tone remains heavy with the US 10-year treasury yields last losing 25 basis points (bps) to 0.885% on Friday whereas Wall Street also dropped during the late hours of the previous week.
Investors will now pay close attention to the Tokyo open as the Japanese traders enjoyed a long weekend due to Friday’s off.
Unless providing a daily closing below 108.55/50 horizontal support, the pair is well inclined to challenge the February month high near 112.20.