USDJPY has lost ground as recession fears boost US Dollar

USDJPY consolidates intraday losses at 131.20 as the US Dollar defends the previous day’s bounce from a two-month low. As the European session begins on Thursday. Nonetheless, the Yen pair is on its way to reversing last week’s gains. The first in five weeks, as Treasury bond yields fall.

Hawkish BoJ concerns contradict dovish Fed forecasts, weighing on the Yen price.

A possible monetary policy divergence between the Bank of Japan (BoJ) and the Federal Reserve Bank of the United States (Fed) appears to be weighing on the Yen pair recently.

According to Bloomberg, there is speculation of the Bank of Japan exiting lose money policy under the new Governor’s leadership. Especially given the need to reverse the 1.55 quadrillion yen ($11.7 trillion) of stimulus introduced during Kuroda’s tenure.

Fears of an economic downturn support the US dollar’s resurgence amid weak data.

On the other hand, suggests There is an almost 57.0% likelihood that the US Federal Reserve will suspend its rate hiking trajectory in May.

Nonetheless, recession worries stemming from consecutive weakness. In US job figures, as well as the danger of contagion, weigh on sentiment while allowing the US Dollar to lick its wounds. Nonetheless, the US Dollar Index (DXY) continues the previous day’s recovery from a two-month low to 102.00 by press time, up 0.12% intraday.

It should be mentioned that the US JOLTS Job Openings for February previously fell to the lowest levels. In 19 months, fueling job worries. While the ADP Employment Change for March fell to 145K from 200K projected and an upwardly revised prior of 261K.

In a similar vein, the last the S&P Global Composite and Services PMIs for March both came in lower than expected, with the former falling to 52.3 from 53.3 preliminary estimates, and the latter falling to 52.6 from 53.8. More significantly, the US ISM Services PMI for the same month fell to 51.2, versus 54.5 expected and 55.1 previously.

Geopolitical concerns from China and North Korea also weigh on sentiment and support the USDJPY comeback. Earlier in the day, US House Speaker Kevin McCarthy met with Taiwanese President Tsai Ing-Wen, reigniting Sino-American tensions. North Korea, on the other hand, accused the United States and South Korea on Thursday of raising tensions to the brink of nuclear war by their actions. combined military drills, promising to respond with “offensive action,” according to state media KCNA, according to Reuters.

Among these bets, the S&P 500 Futures fell for the third day in a row, even as the benchmark US Treasury bond yields remained sluggish near a multi-day low. However, US 10-year Treasury bond rates have fallen for five straight days, returning to a seven-month low on Wednesday, while the two-year equivalent has also shown a four-day decline.

Second-tier US job data is being scrutinized ahead of Friday’s crucial Nonfarm Payrolls report.

In the coming days, the USDJPY will be influenced by headlines about China and second-tier US job data. However, for a clear guide, Friday’s US Nonfarm Payrolls (NFP) should be closely watched.

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