USD/JPY sticks to lows around 107.20, as risk-off trading returns amid mounting fears of the second-wave of coronavirus globally. The Japanese stocks are down over 1% while S&P 500 futures drop 0.40%.
The pair struggles between an ascending trend line from May 07 and a confluence of 21/50-day EMA, respectively around 106.65 and 107.70/75. However, bearish MACD keeps the sellers hopeful.
Fundamental Overview
The pair recently gained a boost from May month trade numbers wherein the Exports marked the worst drop since the Great Financial Crisis (GFC). However, worries concerning the coronavirus (COVID-19) wave 2.0 and geopolitical tension in Asia, not to forget the cautious sentiment ahead of the US-China diplomats’ meeting in Hawaii, question the pair’s upside.
Japan’s preliminary export data plummeted 28.3% versus -17.9% expected and -21.9% prior. The readings suggest that the exports dived for the 17th month while also marking the steepest fall since October 2009. Also on the cards were imports and merchandise trade figures that printed downbeat results.
Earlier during the day, Reuters Tankan Survey suggested that the COVID-19 continues to take a toll on the Japanese manufacturers’ mood.
It should be noted that the market’s trading sentiment seems to recede the previous optimism as Japan marks the highest fresh pandemic numbers since May 30. Also challenging the mood could be stricter measures in Beijing to tame the latest spread of the virus. Furthermore, geopolitical tension in Korea, between the North and the South, as well as the recent tussle between India and China, adds burden to the optimism.
It’s worth mentioning that US Secretary of State Mike Pompeo heads to Hawaii to meet Chinese diplomats. Given the dislike the Trump administrator holds for Beijing, markets are also worried that the updates might recall the risk-aversion wave. Against this backdrop, the US 10-year Treasury yields step back from the previous day’s upbeat performance whereas Japan’s NIKKEI 225 losses 1.0% to 22,358 as we write.
Even so, the market’s risk aversion is still struggling to confront the early-day positive comments from the Dallas Fed President Robert Kaplan.
Considering the lack of major data/events left for publishing during Asia, markets will keep eyes on the qualitative catalysts for fresh impulse.
Reprinted from FXStreet，the copyright all reserved by the original author.
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