- USD/JPY stages modest recovery after closing in on 105 handle.
- 10-year US Treasury bond falls nearly 4% on Monday.
- Wall Street continues to push lower as markets turn risk-averse.
The USD/JPY pair slumped to its lowest level since the flash market crash witnessed in January at 105.05 earlier today but made a technical correction before the next leg lower. As of writing, the pair was trading at 105.30, still losing 0.35% on a daily basis.
The fact that the markets remain risk-averse amid a number of reasons suggest that the pair's rebound is unlikely to gather momentum as investors stay close to safer assets such as the JPY.
All the reason in the world to stay away from risky assets
Heightened concerns over a currency war on top of a trade war after China's central bank's decision to keep the USD/CNY rate above 7 for the third straight session, escalating tensions in Hong Kong with protestors occupying the international airport to force cancellation of all flights, and the heavy selling pressure surrounding emerging market currencies following the Argentinian peso's sharp fall on surprise primary election results, weigh on the market sentiment on Monday.
The 10-year US Treasury bond yield is down nearly 4% on the day and major equity indexes in the US all erase around 1% to reaffirm the risk-off atmosphere, which remains as the primary driver of the pair's price action in the absence of macroeconomic data releases.
Meanwhile, the US Dollar Index is moving in a relatively tight range below the 97.50 mark on Monday, keeping the pair's gains limited for the time being.
Domestic Corporate Goods Price Index will be the only data release from Japan on Tuesday. Later in the day, the Consumer Price Index (CPI) data from the US will be looked upon for fresh impetus.
Technical levels to watch for
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