USD/JPY whipsawed in Asia, moves into consolidation ahead of Fed minutes

USD/JPY is trading between a range of 108.50 and 108.87 in Asia on Wednesday, currently consolidating and flat on the session. While yesterday's positive risk mood extended to Europe on optimism that the pace of new COVID-19 cases may be slowing, the US markets were unable to hold. Despite, the US Secretary of Housing said there are hopeful signs that COVID-19 cases in the US could level out sooner than predicted, US stocks tanked into a sea of red towards the end of the day. 

The bulls were out at the starting blocks on Wall Street and mid-day session comments from New York, Gov. Andrew Cuomo who said that daily hospitalizations were plateauing in the state boosted risk appetite. However, the markets fell and investors were quick to cash in. Consequently, After a day of gains, the Dow finished 0.1%, or 26 points, lower. At its highest point, the index had been up 937 points. The S&P 500 closed down 0.2% and the Nasdaq Composite finished 0.3% lower:

• Wall Street Close: US stock traders taken for a ride, benchmarks end in a sea of red

In other news, the UK Prime Minister Boris Johnson is reported to be in good spirits and in a stable condition in intensive care. Also, Japan’s Prime Minister Abe has declared a state of emergency in Tokyo and six other provinces and plans to combat the economic fallout of COVID-19 with a huge fiscal stimulus package. "The package, worth ¥16.5trn, equates to 20% of GDP.

Meanwhile, European leaders are meeting to discuss a policy tool-kit potentially worth up to €540bn (3.8% of GDP). However, it will be challenging to get a broad agreement between European leaders on the debt mutualisation plan. In the US, Treasury Secretary Steven Mnuchin is seeking an additional USD250bn for small business loans," analysts at ANZ bank explained. 

Eyes on the Fed minutes

As for US 2-year treasury yields, they initially rose from 0.26% to 0.30% but later retraced to 0.26%, 10-year yields similarly tracing 0.72% to 0.78% and then back to 0.71% as US equities surrendered initial gains. This brings us to the minutes from the FOMC’s which are from the unscheduled 15 March meeting. These are now due and markets will be looking to them for "details on the thought process in bringing forward the meeting by 3 days to a Sunday and cutting the funds rate by 100bp, analysts at Westpac explained. 

USD/JPY levels