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1 Sep 2015
USD/JPY: Yen extends gains on ripening risk-aversion
FXStreet (Mumbai) - The Japanese currency extends its corrective rally for the second straight session versus its American peer on Tuesday, as the safe-haven status of the yen was boosted after investors sought to safe-havens after Chinese equity markets went into free-fall again and manufacturing data from the world's second-biggest economy disappointed.
USD/JPY pressured below 121 handle
Currently, the USD/JPY pair trades -0.49% lower at 120.65, now testing lows near 120.60 levels. The major failed every attempt to the upside as the yen bulls retained control following negative performances on the Asian indices as China continues to fall.
The Shanghai Composite Index (SSE) fell over 3% to 3,054.586 points shortly after trading began on Tuesday, before rising to 3,142.03 points to be 2% lower on the day, as of now.
In addition, manufacturing data out of China added to the risk-off mood in markets, confirming ongoing weakness in China. The China Federation of Logistics and Purchasing (CFLP) manufacturing PMI fell from 50.0 in July to 49.7 in August, its lowest in three years.
While a private Chinese manufacturing gauge also confirmed that the sector was in contraction in August, with the Caixin PMI coming in at a revised 47.3 in August, the lowest since 2009, and down from July's 47.8.
Later in the week ahead, the major is expected to be highly influenced by the US non-farm payrolls data which may set the tone for Fed interest rate-hikes this year. While manufacturing reports from the US due later today will also provide fresh cues for the pair.
USD/JPY Technical levels to consider
To the upside, the next resistance is located 121.14 (Today’s High) levels and above which it could extend gains 121.75 (Aug 31 High) levels. To the downside immediate support might be located at 120.41 (Aug 25 High) below that at 120 (Psychological levels).
USD/JPY pressured below 121 handle
Currently, the USD/JPY pair trades -0.49% lower at 120.65, now testing lows near 120.60 levels. The major failed every attempt to the upside as the yen bulls retained control following negative performances on the Asian indices as China continues to fall.
The Shanghai Composite Index (SSE) fell over 3% to 3,054.586 points shortly after trading began on Tuesday, before rising to 3,142.03 points to be 2% lower on the day, as of now.
In addition, manufacturing data out of China added to the risk-off mood in markets, confirming ongoing weakness in China. The China Federation of Logistics and Purchasing (CFLP) manufacturing PMI fell from 50.0 in July to 49.7 in August, its lowest in three years.
While a private Chinese manufacturing gauge also confirmed that the sector was in contraction in August, with the Caixin PMI coming in at a revised 47.3 in August, the lowest since 2009, and down from July's 47.8.
Later in the week ahead, the major is expected to be highly influenced by the US non-farm payrolls data which may set the tone for Fed interest rate-hikes this year. While manufacturing reports from the US due later today will also provide fresh cues for the pair.
USD/JPY Technical levels to consider
To the upside, the next resistance is located 121.14 (Today’s High) levels and above which it could extend gains 121.75 (Aug 31 High) levels. To the downside immediate support might be located at 120.41 (Aug 25 High) below that at 120 (Psychological levels).