USD/JPY fades a bounce to 108.30, focus on trade
- Finds support from the uptick in S&P 500 futures, positive European equities.
- Latest tariffs threat by the US President Trump on China to cap the upside?
- Focus on US macro releases, US-China trade war and US-Mexico trade talks.
The bullish grip around the Yen weakened slightly last hour, allowing a tepid bounce in the USD/JPY pair from just ahead of the 108 handle, as the risk-off action in the European equities and US equity futures dampened the demand for the safe-havens such as the Japanese currency.
The European traders appear to have ignored the latest tariff threat by the US President Trump as well as the counter-response by the Chinese Commerce Ministry, as upbeat German factory data, expectations of a dovish ECB combined with the oil-price rebound help to lift the overall market sentiment.
Despite the latest uptick, the spot looks vulnerable amid broad-based US dollar weakness and negative Treasury yields, as markets still remain wary about the US economic health heading into the US non-farm payrolls release due this Friday.
On Wednesday, the greenback staged a comeback across its main competitors after a stronger US ISM services PMI report outweighed a weak ADP jobs data.
Looking ahead, the next event risk for the major remains the ECB monetary policy decision, which may have a huge impact on the market sentiment while the US trade figures and jobless claims will be also closely eyed for fresh impetus. All eyes also remain on the further US-Mexico trade talks due later today.
Technical levels to watch