- USD/JPY drops despite upbeat China data and dismal Japanese data.
- Yen may be drawing bids due to losses in the US stock futures.
The USD/JPY pair is trading in the red near 107.68 at press time, having put in a session high of 108.16 two hours ago.
Data released early Wednesday was supportive of risk assets. China's Caixin Manufacturing PMI rose to 51.2 in June, the fastest pace of growth since December, and up from May’s 50.7.
The uptick in yen also looks confounding given the Bank of Japan's "tankan" released early Wednesday showed the pessimistic mood among the Japanese manufacturers’ pessimism worsened to levels not seen in over 10 years in the second quarter.
Further, the US 10-year yield has risen by over two basis points to 0.677% in the USD-positive manner.
While it is difficult to pin down the exact cause for the decline, one may argue that the anti-risk yen is drawing bids due to the losses in the US stock futures. At press time, the futures tied to the S&P 500 are reporting a 0.28% drop.
In addition, the rising number of coronavirus cases in the US may be forcing investors to take shelter under haven assets. Virus cases in the US jumped by more than 46,000 on Tuesday, according to Reuters.
Looking forward, the focus remains on the broader market sentiment. The pair will likely extend the decline to 50-day simple moving average support at 107.31 if the European equities print losses. During the US session, the focus would be on the US ISM Manufacturing data for June.
Technical levels
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