USD/JPY extends slide and looks for a test of May’s low
- Yen gains momentum as Wall Street trims gains, DXY remains under pressure.
- USD/JPY heads for lowest weekly close since January.
The USD/JPY pair dropped further ahead of the London fix on the back of a decline of the US Dollar across the board and a pullback in equity prices. The greenback is about to end on a weak note the week, particularly against majors.
Recently USD/JPY fell to 109.26, hitting a fresh weekly low. As of writing, trades at 109.35, down 80 pips for the level it had seven days ago, on its way to the lowest weekly close since early January. The greenback came under pressure versus the yen amid lower US bond yields and affected by the latest round of US data that came in below expectations.
On Tuesday the pair peaked at 110.70 and started to decline, ending the rebound from the 109.00 zone. Now it appears to be poised to test May’s low at 109.01.
Week ahead
US-China tensions are likely to remain as a key driver. Market participants will have the chance to listen to more speeches from Fed’s official after the recent weaker-than-expected data. Next week will be relatively quiet in the US regarding economic indicators, starting with a holiday on Monday. Data to be released include a new Q1 GDP estimation and the personal income and spending report.
“In Japan, we have a quiet week from Monday to Thursday. Then on Friday, we get April industrial production. Manufacturing PMIs suggest we will get a pickup here. On the same day, April retail sales tick in. Q1 has been weak but with a modestly increasing trend since retail sales plunged in January. Weak labour cash income and consumer confidence suggest we are not in for a strong rebound any time soon”, said Danske Bank analysts.