- USD/JPY fails to keep the bounce off 106.68 while flashing two-day losing streak.
- US readies a Phase 4 fiscal package, likely to be out by the end of July.
- Japan approves virus drug dexamethasone for use, likely to keep event restrictions in a meet despite receding pandemic data.
- Preliminary readings of Jibun Bank Manufacturing PMI for July
USD/JPY remains under pressure around 106.80 as markets in Tokyo open for Wednesday’s trading. The yen pair dropped to the one-week low the previous day amid broad US dollar weakness, before bouncing off 106.68. Though, bulls couldn’t stay for long amid a mixed set of the early-Asian catalysts while joining the Bears’ line.
Hopes of further stimulus confront virus woes…
Following the European leaders’ ability to unveil details of 750 billion Euros of fiscal package, the US Senators are also jostling with another trillion-dollar stimulus bundle to combat the coronavirus (COVID-19). The US President Donald Trump and House Speak Nancy Pelosi said that policymakers are progressing in talks while American Treasury Secretary Steve Mnuchin goes a step ahead of providing the clear deadline for the deal, i.e. July-end.
Even so, the surge in the pandemic numbers from the US keeps the risk-on mood capped. As per the latest update from The Guardian, America registered the highest one-day virus-led death toll of 1,003 on Tuesday. The news also quotes the US Centers for Disease Control and Prevention (CDC) forecasting up to 170,000 Americans could have died of Covid-19 by August 08.
On the other hand, Japan approved the usage of dexamethasone in an attempt to offer a variety of cures to the pandemic after earlier passing Gilead’s remdesivir for the use. The Japanese policymakers are to hold the meeting to discuss the virus-led restrictions as the latest figures have been positive. Though, market speculations avoid any change to guidelines for gatherings in events.
Against this backdrop, Japan’s Nikkei 25 drops 0.35% to 22,805 while S&P 500 Futures also recede from the initial gains to 3,256, still up 0.16% on a day.
Talking about the data, Japan’s preliminary readings of Jibun Bank Manufacturing PMI for July grew past-40.1 prior and 39.6 forecast to 42.6.
Looking forward, traders will keep eyes on the risk catalysts, mainly concerning stimulus and virus, for fresh impulse. However, any surprise announcement of trade-negative headlines concerning the US and Chinese tussle, which has been absent off-late, could offer additional liquidity.
Technical analysis
Sellers seek a fresh monthly low under 106.60 to attack an area comprising bottoms marked in May and June months around 106.10-106.00. Alternatively, 50-day SMA near 107.50 restricts the pair’s near-term upside.
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