Japanese Yen Gains as S&P 500 Falls, Australian Dollar Vulnerable

Japanese Yen, USD/JPY, S&P 500, Australian Dollar, Virus – Asia Pacific Market Open

  • Japanese Yen gains as the S&P 500 sinks, haven-linked USD aims higher
  • US private payrolls saw a record decline as California virus cases jumped
  • Asia Pacific stocks could follow Wall Street lower, sinking the AUD/USD

Japanese Yen Gains as Australian Dollar Weakens Alongside Wall Street

The anti-risk Japanese Yen and similarly-behaving US Dollar aimed higher on Wednesday as sentiment deteriorated into the end of the session. The S&P 500 and Dow Jones closed -0.70% and -0.91% respectively, weighed down by financial, energy and utility shares. Information technology and consumer discretionary stocks fared relatively better. The growth-linked Australian Dollar and New Zealand Dollar weakened.

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Worries about the health of global growth and speed of a recovery may be rising. Yesterday, the Fed’s Vice Chair warned about the pace it could take for the labor market to reinvigorate. According to Automatic Data Processing Inc (ADP), the world’s largest economy cut a record 20.2m private positions last month. Newsflow around layoffs flowed, with Uber Inc. drawing down its workforce by 14% with more likely to come.

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Meanwhile on the coronavirus front, Spain’s parliament voted to extend the state of emergency until May 23. This is as California – the biggest economy in the US – reported the largest single-day jump in virus cases. In Texas, reports increased by 3.2% as fatalities jumped the most in a week. The latter is one of the early states that loosened lockdown policies. Risk aversion may be reinvigorated if states are forced to reverse course.

Thursday’s Asia Pacific Trading Session

S&P 500 futures are pointing lower heading into Thursday’s Asia Pacific trading session, hinting at a “risk-off” tilt that could come. Keep in mind that in the background, US-China trade tensions could escalate as President Donald Trump threatened tariffs against the latter for their handling of the pandemic outbreak.

If market mood continues deteriorating, the Australian Dollar may weaken and vice versa. That could also benefit the Yen. AUD/USD may see some volatility on Chinese trade data, but its broader trajectory could remain on sentiment. Today’s Bank of England rate decision is also due at 6:00 GMT.

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Japanese Yen Technical Analysis

The Japanese Yen has extended its breakout against the US Dollar since USD/JPY took out key support from late March – as expected. Prices have since cleared the 61.8% Fibonacci extension at 106.32, exposing the 78.6% level at 105.52. In the event of a turn higher, reinstating the bearish bias may be a falling trend line from April’s high – pink line on the 4-hour chart below.

USD/JPY
MIXED

Data provided by



of clients are net long.



of clients are net short.

Change in Longs Shorts OI
Daily 4% 26% 14%
Weekly 14% -8% 2%

USD/JPY – 4-Hour Chart

Japanese Yen Gains as S&P 500 Falls, Australian Dollar Vulnerable

Chart Created in TradingView

— Written by Daniel Dubrovsky, Currency Analyst for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter

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