- USD/JPY couldn’t continue overnight gains, fresh selling seen.
- Pull back in the equity rally pushed investors to safe-haven Yen.
- Declining US bond yields and doubts on the US economic revival keeps dollar bulls in check.
The USD/JPY was trading in the red in the early US session, around 105.80 region – the lower end of its daily range.
The pair had bounced up by around 100 pips yesterday from its monthly low but gave back a part of it in today’s trading. The fall in equity markets attracted flows to the haven-linked Japanese Yen and drove the USD/JPY down by 35-40 pips to around 106.20.
The FOMC minutes released on Wednesday affected the global risk sentiments as it has a gloomy tone regarding the health of the US economy. As the fiscal stimulus has been stuck in a political stalemate, the Fed’s sombre discussions didn’t help the market mood.
The US Philly Fed Manufacturing Index for August declined more than the expected 21 to post a reading of 17.2.
Also, the unexpected steepness in unemployment claims in the US – rose to 1.106 million against an expected fall to 925K – also affected the dollar strength.
The USD/JPY bears will check for further confirmation selling to ensure that the latest bounce has petered out and the previous bearish trend is still intact.
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