- USD/JPY drops almost two hundred pips on Thursday.
- US S&P Global PMI falls to monthly lows
- US yields collapse as recession fears increase.
The USD/JPY dropped further following the release of US economic data and bottomed at 134.21, reaching the lowest level in six days. Bonds are rising across the globe, supporting the Japanese yen.
The pair then rebounded modestly, and it is hovering around 134.60/70, down more than 200 pips from Wednesday’s multi-year high. Below 134.40, the next support is seen at 133.80.
Yen gains as growth outlook worsen
Earlier on Thursday, Eurozone PMIs came in below expectations and triggered a rally in European bonds and helped the yen. More recently, the US S&P Global PMI also showed a significant decline in activity. Both the manufacturing and service numbers fell to the lowest level in months at 52.4 (consensus: 56) and 51.6 (53.5), respectively. Despite the worrying data, Wall Street is rising, with the Nasdaq up 1.25% and the S&P 500 climbs 0.63%.
The report added to concerns about the economy and weighed on monetary policy expectations. The US 10-year yield fell to 3.00%, the lowest in two weeks; just on Friday, it was trading near 3.50%, while the 30-year fell to 3.15%.
The US lost momentum across the board after the report. The DXY erased daily gains and pulled back to 104.20/30. The dollar’s losses against the yen are offset by a slide of EUR/USD as German bonds have the best day in years.
Fed Chair Powell is testifying again at Congress. Regarding concerns about the economic outlook, he mentioned is possible to have a strong labor market while curbing inflation. Fed’s Bowman said another 75 bps rate hike will be appropriate in July.
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD remained bid above 0.6500
AUD/USD extended further its bullish performance, advancing for the fourth session in a row on Thursday, although a sustainable breakout of the key 200-day SMA at 0.6526 still remain elusive.
EUR/USD faces a minor resistance near at 1.0750
EUR/USD quickly left behind Wednesday’s small downtick and resumed its uptrend north of 1.0700 the figure, always on the back of the persistent sell-off in the US Dollar ahead of key PCE data on Friday.
Gold holds around $2,330 after dismal US data
Gold fell below $2,320 in the early American session as US yields shot higher after the data showed a significant increase in the US GDP price deflator in Q1. With safe-haven flows dominating the markets, however, XAU/USD reversed its direction and rose above $2,340.
Bitcoin price continues to get rejected from $65K resistance as SEC delays decision on spot BTC ETF options
Bitcoin (BTC) price has markets in disarray, provoking a broader market crash as it slumped to the $62,000 range on Thursday. Meanwhile, reverberations from spot BTC exchange-traded funds (ETFs) continue to influence the market.
US economy: slower growth with stronger inflation
The dollar strengthened, and stocks fell after statistical data from the US. The focus was on the preliminary estimate of GDP for the first quarter. Annualised quarterly growth came in at just 1.6%, down from the 2.5% and 3.4% previously forecast.