USD/JPY attracts fresh sellers following an early uptick
The USD/JPY pair struggles to capitalize on its intraday positive move and meets with a fresh supply in the vicinity of the 140.00 psychological mark on Thursday. Spot prices retreat to the lower end of the daily range and trade just above the 139.00 mark, or a one-week low touched earlier today, despite the better-than-expected US ADP report. Data published by Automatic Data Processing (ADP) showed that US private sector employers added 278K jobs in May, lower than the 296K in the previous month, though well above consensus estimates for a reading of 170K. The initial market reaction fades rather quickly amid reduced bets for another 25 bps rate hike by the Federal Reserve (Fed) in June. This, in turn, keeps the US Dollar (USD) bulls on the defensive and acts as a headwind for the USD/JPY pair.
The Japanese Yen (JPY), on the other hand, is underpinned by the prospect of Japanese authorities intervening in the markets. In fact, Japan’s Vice Finance Minister for international affairs, Masato Kanda, hinted on Wednesday that authorities may act to curd the sinking Yen, saying that they will closely watch currency market moves and respond appropriately as needed. Apart from this, a weaker risk tone benefits the safe-haven JPY and exerts pressure on the USD/JPY pair. The market sentiment remains fragile amid growing worries about a global economic slowdown, particularly in China. It is worth recalling that official PMI data released earlier this week had shown a sustained downturn in the world's second-largest economy. This, to a larger extent, overshadows a private survey, which showed that China’s manufacturing sector registered modest growth in May and the progress towards averting an unprecedented US debt default.
The aforementioned fundamental backdrop suggests that the path of least resistance for the USD/JPY pair is to the downside. Bearish traders, however, might refrain from placing aggressive bets and prefer to move to the sidelines ahead of the release of the closely-watched US monthly employment details, popularly known as the NFP report on Friday. In the meantime, the US ISM Manufacturing PMI, along with Fedspeak, might produce short-term trading opportunities on Thursday.
The aforementioned fundamental backdrop suggests that the path of least resistance for the USD/JPY pair is to the downside. Bearish traders, however, might refrain from placing aggressive bets and prefer to move to the sidelines ahead of the release of the closely-watched US monthly employment details, popularly known as the NFP report on Friday. In the meantime, the US ISM Manufacturing PMI, along with Fedspeak, might produce short-term trading opportunities on Thursday.