- USD/JPY remains muted on Monday in the initial Asain trading session.
- US Dollar Index pares gains below 92.50, weighs on USD/JPY.
- An uptick in US Treasury yields capped the downside in the US dollar.
After testing the high of 110.46 in the previous week, USD/JPY kickstarts the fresh trading week on a lower note. The pair confides in a very narrow trade band of less than 10-pips movement. At the time of writing, USD/JPY is trading at 109.89, down 0.04% for the day.
The US Dollar Index (DXY), which measures the performance of the greenback against its six major rivals trades below 92.50, diverging its path from the bond yields. This, in turn, built pressure on USD/JPY.
Investors remained pessimistic about the surging COVID-19 cases and their impact on the global economic recovery. The US Producer Price index (PPI) jumped 0.7% in August, above the market expectations of 0.6. The readings could influence the Fed to step back easy policies.
On the other hand, the Japanese yen holds ground benefiting from its safe-haven appeal. Japan’s economy had shown signs of more momentum than market expectations ahead of a record surge in virus cases. The Gross Domestic Product (GDP) expanded grew 1.9% in June above the market consensus of 1.3%.
It is worth noting that, S&P 500 Futures were trading at 4,458.58, down 0.77% for the day. As for now, investors are waiting for the Japanese PPI data, US Consumer Inflation expectations to gauge the market sentiment.