USD/JPY hits multi-month lows near 109.00 amid risk aversion

• USD/JPY continues to decline on Wednesday for the straight second day.
• US Dollar Index remains pressurized near 92.00 on mixed economic data, Fed’s dovish outlook.
• The yen gains on its safe-haven appeal despite rising coronavirus cases in Japan.

USD/JPY extends the losses in the initial Asian trading session on Wednesday. The sluggish movement in the US dollar sponsors the lacklustre performance of the pair.

At the time of writing, USD/JPY is trading at 109.05, down 0.01 % for the day.

The US Dollar Index, which tracks the performance of the greenback against its six major rivals, trades near 92.00 and hovering in the same trading range since the beginning of the August month series.

Fed’s dovish outlook and fears of slowing US economic growth negatively impacts the USD’s valuation. The rapid spread of the Delta variant offset strong corporate results. 

As per the latest reports, the COVID-19 hospitalization in the US reached 50k for the first time since February.
The ISM Manufacturing Purchase Manager Index (PMI) came lower at 59.5 in July, whereas the Factory Orders surged 1.5% in June, beating the market consensus of 1%.

On the other hand, the Japanese yen held the ground on its safe-haven appeal as investor’s risk appetite dampens on rising coronavirus infections. The Japanese government imposed a state of emergency in Tokyo until after the Olympics games end on August 8.

Meanwhile, the escalating geopolitical tension in middle-east after a tanker ship in the Gulf of Oman was seized by suspected Iranian gunmen spooked investors. This, in turn, results in the fund flow toward safer yen.

As for now, investors wait for US ADP Employment change to gauge the market sentiment.

USD/JPY additional levels