USD/JPY keeps losses after China rate cut
|- CHina's rate cut and liquidity infusion have failed to put a bid under the risky assets.
- The anti-risk Yen remains better bid and is keeping USD/JPY on the defensive.
- Equity markets may not be out of the woods yet, according to Goldman Sachs.
USD/JPY continues to trade in the red as the rate cut by China has failed to bring cheer to the equity markets.
The currency pair is currently trading near 107.25, representing a 0.60% loss on the day, having hit a session low of 107.12 a few minutes before press time.
The People's Bank of China cut the seven-day reverse repo rate to 2.2% from 2.4% and injected $7 billion or 50 billion yuan into the banking system.
The move, however, has failed to put a bid under the risky assets. The futures on the S&P 500 is keeping losses and is currently reporting a 1% decline on the day. Stocks in Asia are also feeling the pull of gravity with Japan's Nikkei index shedding 3.4%. As a result, the anti-risk yen remains better bid.
The pair may decline further on fears the Japanese government may declare a state of emergency due to the worsening situation on the coronavirus-front. Japan's Cabinet Secretary Suga was out on the wires a few minutes ago informing markets about the possibility of Japan declaring an emergency.
Further, analysts at Goldman Sachs are of the opinion that the economic fallout in the West is just beginning and the equity markets may see renewed selling. Investors, therefore, could continue to build longs in traditional safe havens like JPY.
Technical levels
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.