Jul 08, 2022 02:57AM ET
By: AnalysisWatch
The USD/JPY recovered from an intraday low at 135.30 but remains under pressure at 135.70, breaking a four-day uptrend early Friday in Europe.
The yen pair's losses may be related to the numerous catalysts fueling anti-risk sentiment at home and abroad. Among others, the firing of former Prime Minister Shinzo Abe ahead of the elections seems to be attracting a lot of attention. In the same vein are market fears about the key U.S. jobs report for June and doubts about China's ability to address its economic woes through large-scale stimulus measures.
On the other hand, news that China is poised to launch a $220 billion stimulus program with unprecedented bond sales, according to Bloomberg, had boosted market sentiment before doubts about large-scale stimulus and COVID issues called the bears back. Reuters mentioned the local government's unwillingness to take further stimulus measures, mainly due to a limit at home to mark the likelihood of failure of such a huge stimulus from the dragon nation.
Moving forward, USD/JPY traders should pay attention to the risk catalysts ahead of the US labor market data for clear guidance. According to forecasts, the US Nonfarm Payrolls (NFP) data is expected to show the slowest monthly job growth since April last year, falling to 268,000 from 390,000 in June, while the unemployment rate is expected to remain unchanged at 3.6% in the same month.
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