- USD/JPY registers losses for the third day in a row.
- Fed takes temporary measures to ease liquidity for big banks.
- Broad risk-off continues as Pandemic numbers rally, lockdowns extended.
- No major data/event on the calendar, coronavirus keeps the driver’s seat.
USD/JPY remains on the back foot, despite recently bouncing off 107.00 to 107.15, amid the early Thursday morning in Asia. The Japanese yen benefits from its safe-haven allure while being the only major to gain versus the US dollar during the current tough time, mainly due to the coronavirus (COVID-19) crisis.
The yen pair recently took clues from the warnings of the tough time and rising virus cases from the key global personalities including US President Donald Trump, World Health Organization (WHO) official and the UK PM Boris Johnson. Confirming their words were the hike in the global cases, currently near 1 million, as well as a sustained run-up on the hot-spots, namely the US, Italy and Spain.
As a result, the market’s risk-tone remains heavy with the US 10-year treasury yields down nine basis points (bps) to 0.61% and Wall Street benchmarks closing Wednesday with more than 4.0% losses each.
The BOJ stays ready to act but feels less necessary to do so currently whereas the US Federal Reserve (Fed) recently eased measures, temporarily for one year, to help large banks.
In addition to the Japanese yen’s risk-safety nature, upbeat activity figures from Tankan, a contrast to the US PMI data, also weighed on the USD/JPY pair. Though, a bit better than expected ADP Employment Change from the US, due to the period of calculation, seem to limit the pair’s downside off-late.
Moving on, investors will keep taking clues from the coronavirus saga while paying a little heed to the economic calendar, which is also light, during the day. However, the US Jobless Claims will be important to watch as a surprisingly less than forecast 3500K figures, for the week ended on March 25, could help the US dollar to regain its strength versus the JPY.
In addition to the immediate upside barrier of 21-day SMA, currently near 107.70, the pair gets an extra burden via a 200-day SMA level of 108.30 to break to recall the buyers.