USD/JPY points more weakness below 108.30 amid weaker USD
|- USD/JPY trades with negative bias in the early Asian session.
- A weaker USD pulls the demand for the pair, post-disappointing US Nonfarm Payrolls on Friday.
- The US Treasury yields bounce from lower levels, providing a cushion to the US dollar.
The USD/JPY opens the fresh trading week on a muted tone in the early Asian session. The heavy selling tone around the US dollar pushed the USD/JPY pair below the 108.50 mark on Friday to levels last seen on April 29.
At the time of writing, USD/JPY is trading at, 108.56, down 0.03% on the day.
The US dollar index (USD), which tracks the movement of the greenback against a basket of majors, looked miserable post-US employment data. The data, which came unexpectedly lower surprised the market and the US dollar fell freely in a knee-jerk reaction to the poor readings. The US Treasury yields dived to 1.46% before recovering back to 1.57%.
The US economy added 226k jobs against the market expectation of 1000k. The data echoed the Fed official’s stance on the continuation of ultra-accommodative monetary policy, which poured cold water over the rising interest rates hopes. Consequently, investors turned their back on the US dollar.
The US treasury Secretary Jenet Yellen, however, remained optimistic on the US economic recovery arguing that monthly data sometimes responds to some surprising and temporary factors so could not be considered as an underlying trend. The market reaction is worth watching after these comments at the start of the new trading week.
On the other hand, Japan's extended state of emergency over the coronavirus pandemic till the end of May is expected to take a toll on the economy and could dim the prospects for a steady recovery. This, in turn, could weigh on the Japanese yen and would keep selling pressure limited for the pair.
In the absence of any fundamental catalyst, the dynamics around the US dollar and the US treasury yields continue to influence the movement in the short term.
USD/JPY Additional Levels
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