USD/JPY clings to mild losses below 146.00 on softer yields, upbeat Japan PMI ahead of US data

• USD/JPY remains depressed at intraday low, down for the second consecutive day.
• US Treasury bond yields, JGB coupons fade previous strength amid cautious optimism.
• Upbeat prints of Japan’s Jibun Bank PMIs for August join positioning of US S&P Global PMIs to weigh on Yen pair.
• Mixed concerns about BoJ, Fed challenge USD/JPY traders ahead of Japan inflation, Jackson Hole event.

USD/JPY holds lower grounds near the intraday bottom, sidelined around 146.60-70 during early Wednesday morning in Europe, as market players seek more clues to extend the Yen pair’s two-day downtrend. Even so, upbeat Japan data and a pullback in the Treasury bond yields join cautious optimism to weigh on the risk-barometer pair ahead of the top-tier US activity data for August.

Earlier in the day, Japan’s first reading of the Jibun Bank Manufacturing PMI for August improves to 49.7 from 49.6, versus 49.5 expected, whereas the Services counterpart rose to 54.3 for the said month from 53.8 previous figures.

Talking about the bond coupons, the US 10-year Treasury bond yields keep the previous day’s retreat from the highest level since late 2007 to 4.31% by the press time whereas the yields of Japanese Government Bonds (JGBs) struggle around the levels last seen in 2014.

Also exerting downside pressure on the Yen pair could be the mixed concerns about the Bank of Japan (BoJ) as Governor Kazuo Ueda refrained from discussing the details of Tuesday’s meeting with Japan Prime Minister Fumio Kishida, which he termed a ‘routine’ one. BoJ’s Kuroda, however, did mention that he explained BoJ’s July policy decision to the PM.

On the other hand, the US flashed slight improvement in the US Existing Home Sales for July and the Richmond Fed Manufacturing Index for August, which in turn should entertain the USD/JPY sellers. However, hawkish statements from Federal Reserve Bank of Richmond President Thomas Barkin put a floor under the pair.

Additionally, hopes of witnessing improvement in the US-China ties and upbeat performance of Japan’s benchmark equity gauge Nikkei seem to defend the risk takers and weigh on the USD/JPY pair amid uncertainty about the major central bank’s next moves.

Looking forward, the preliminary readings of the August month Purchasing Managers Indexes (PMIs) and Existing Home Sales for July for the US will join the US-China headlines, as well as the bond market moves, to direct intraday moves of the USD/JPY pair. However, major attention will be given to Friday’s Tokyo Consumer Price Index for August and top-tier central bankers’ speeches at the annual Jackson Hole Symposium event for clear directions.

Technical analysis

Although multiple tops around 146.50-60 join the nearly overbought RSI (14) line to challenge the USD/JPY buyers, the Yen pair’s downside remains elusive unless providing a daily close beneath 144.80-70 support zone comprising levels marked during late June and early July.