USD/JPY clings to mild gains below 150.00 following Japanese PMI data

• USD/JPY posts modest gains around 149.76 after the Japanese PMI data.
• Japanese Jibun Bank Manufacturing PMI for October eased to 48.5 vs. 48.5 prior, worse than expectation.
• The Chicago Fed National Activity Index suggests the US economy is still some distance from a recession.
• Investors await the S&P Global PMI reports for fresh impetus.

The USD/JPY pair sticks to mild gains after bouncing off the 149.55 low during the early Asian session on Tuesday. The pair currently trades near 149.76, gaining 0.03% on the day. However, the fear of FX intervention by the Japanese authorities remains intact.

The latest economic data released on Tuesday revealed that Japanese Jibun Bank Manufacturing PMI for October eased to 48.5 versus 48.5 prior, worse than the market expectation of 48.9. Meanwhile, the Services PMI came in at 51.1 from the previous reading of 53.8.

Last week, the Bank of Japan (BoJ) governor Kazuo Ueda reiterated that the BoJ would be “patiently maintaining current easy policy, This, in turn, exerts some selling pressure to the Japanese Yen (JPY) against the US Dollar (USD). Nevertheless, traders will monitor the potential FX intervention by the Japanese authority to support the JPY’s depreciation.

On the other hand, the weaker Greenback might cap the upside of the pair. The US Dollar Index (DXY), a measure of the value of the USD relative to a basket of foreign currencies, drops to a one-month low of 105.57. The US Treasury bond has had a volatile week, with the 10-year Treasury yield reaching 5.02% for the first time since 2007, but then reversing its course, falling to 4.865%.

The Chicago Fed National Activity Index suggests the US economy is still some distance from a recession. The figure rose to +0.02 in September versus -0.22 prior. A zero value for the index indicates the economy is growing at trend. A value of zero for the index implies that the economy is expanding at its current rate.

Traders will keep an eye on the US S&P Global PMI data on Tuesday. Later this week, the preliminary estimates of the US Q3 Gross Domestic Product (GDP) and the Core Personal Consumption Expenditure Index will be released on Thursday and Friday, respectively. Fed officials will not deliver any speeches this week due to the blackout period ahead of the FOMC meeting next week.

On the JPY’s front, the Japanese Coincident Index and Leading Economic Index for August will be due on Wednesday. On Friday, attention will shift to the annual Tokyo Consumer Price Index (CPI) for October. These figures could give a clear direction to the USD/JPY pair.