Given the latest risk-off concerning the US-China trade relations, not to forget downbeat Japanese data and dovish BOJ minutes, the EUR/JPY pair stays under pressure while taking rounds to 120.80 during the pre-European session on Wednesday.
Following a day filled with too much optimism surrounding the “Phase One” trade deal between the United States (US) and China, global media unearthed doubts over the global superpowers’ trade agreement. Adding to the doubts were China’s strong stand against Hong Kong protestors and anyone, likely the US, entering between “One Country, Two Systems”.
On the other hand, Japan’s services activity as indicated by the Jibun Bank Services Purchasing Managers Index (PMI) shrank for the first time in 2016 during October. Further, minutes of the Bank of Japan’s (BOJ) October month meeting suggests that most policymakers keep support for easy money policy while holding expectations of a gradual recovery in the headlines inflation numbers towards 2.0% target.
With this, the US 10-year Treasury yields decline to 1.85% while Asian stocks also pare gains after rising during the recent days.
Even if trade if news about the US-China trade/political relations will be in the spotlight during the day, investors’ immediate focus will be on Germany’s September month Factory Orders followed by German/Eurozone PMIs. While German numbers and Eurozone Retail Sales could please the new European Central Bank (ECB) President Christine Lagarde, EU PMIs still stop the hawks.
EUR/JPY SHORT (Sell)
ENTER AT: 120.71