USD/JPY drops below 106.70 ahead of US PMI data
|- Wall Street looks to open deep in red on Friday.
- US Dollar Index struggles to recover its losses ahead of PMI data.
- 10-year US T-bond yield falls more than 2%.
The USD/JPY pair snapped its three-day losing streak and gained nearly 50 pips on Thursday but failed to preserve its recovery momentum. With the market sentiment turning sour on the first trading day of May, the pair stretched lower and was last seen down 0.5% on the day at 106.62.
Eyes on Wall Street and US PMI data
Reflecting the dismal market mood, the S&P 500 futures are falling more than 2% on the day and the 10-year US Treasury bond is dropping 2.65%.
Meanwhile, the US Dollar Index, which tracks the greenback's performance against a basket of six major currencies, is staying relatively calm near the 99 handle, allowing the risk perception to drive the pair's action. During the American session, both the IHS Markit and the ISM will be releasing the Manufacturing PMI reports.
Experts expect the ISM data to show further contraction in the economic activity in the manufacturing sector. A lower-than-expected reading could cause risk-aversion to continue to dominate the financial markets and weigh on the pair. On the other hand, a rebound in the PMI data, however unlikely it is, could help the pair limit its losses.
Technical levels to watch for
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