USD/JPY erases daily losses, turn positive on the day above 107.80
- The United States economy grew 2% in the second quarter.
- The Greenback gathered strength after weakening briefly earlier in the session.
- Wall Street pared the majority of early losses.
The USD/JPY pair dropped to a daily low of 107.43 during the early trading hours of the American session on Thursday but easily recovered its losses boosted by a broad-based USD strength. As of writing, the pair was up 0.1% on the day at 107.86.
The pair spent the first half of the day moving sideways near the 107.60 mark amid a lack of significant macroeconomic drivers. Despite the recovering market sentiment after Chinese Commerce Ministry Spokesman Gao said that they were preparing to make progress in the next round of high-level trade talks in Washington, the subdued market action didn't allow the pair to make a sudden move.
Mixed market reaction to the US data
Later in the day, the United States (US) Bureau of Economic Analysis (BEA) reported that, according to its third estimate, the economy, as measured by the gross domestic product (GDP), expanded by 2% on a yearly basis in the second quarter. This reading came in line with the market expectation but the fact that the publication revealed that the business investment contracted more than previously estimated weighed on the Greenback.
The US Dollar Index, which tracks the USD's value against a basket of six major currencies, dropped to a fresh daily low of 98.84 with the initial reaction but staged a decisive rebound in the last hours to climb to a multi-week high of 99.15.
Additionally, after starting the day in the negative territory, Wall Street's main indexes pared the majority of their early losses to make it difficult for the JPY to find demand as a safe-haven.
On Friday, Tokyo Consumer Price Index (CPI) data from Japan and the Personal Consumption Expenditures (PCE) Price Index data from the US will be looked upon for fresh impetus.
Technical levels to watch for
Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
