USD/JPY slips to near 2-week lows, below mid-108.00s
|- Trade uncertainty continued benefitting the JPY’s safe-haven status.
- Comments by China’s foreign minister further weighed on the sentiment.
- Investors now look forward to important the US data for a fresh impetus.
The greenback remained on the defensive against its Japanese counterpart and dragged the USD/JPY pair to near two-week lows, below mid-108.00s in the last hour.
The pair extended this week's sharp retracement slide from six-month tops and traded with a bearish bias for the fourth consecutive session on Wednesday. Persistent trade uncertainty continued underpinning the Japanese yen's safe-haven status and turned out to be one of the key factors that kept exerting downward pressure on the major.
Focus remains on trade developments
The US President Trump on Tuesday indicated that a trade deal with China may not come until after the 2020 US presidential election. Adding to this, the US Congress on Tuesday overwhelmingly approved a bill condemning China’s mass detention of ethnic Muslims, and called for sanctions against some officials responsible.
This comes after Trump last week signed a bill supporting Hong Kong’s pro-democracy protesters, Given China's harsh reaction and warning to retaliate, fresh concerns about a further escalated tensions between the world's two largest economies weighed on the global risk sentiment and boosted demand for perceived safe-haven assets.
The already weaker sentiment deteriorated further in reaction to not so optimistic comments from China's foreign ministry, saying that the US will pay the price over Hong Kong and Xinjiang bills. The minister added that China will not set any timeline or deadline for a trade deal with the US and further fueled the prevalent risk-off mood.
Bearish traders further took cues from some renewed weakness in the US Treasury bond yields. This coupled with a subdued US dollar demand also did little to ease the bearish pressure or stall the pair's ongoing slide to the lowest level since November 21.
Moving ahead, market participants now look forward to the US economic docket, highlighting the release of ADP report on private-sector employment and ISM Non-Manufacturing PMI, which has the potential to influence the USD price dynamics and might provide some immediate respite for the bulls.
Technical levels to watch
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