Ella 
USD/JPY held near its intraday bottom in early European trade on Wednesday, capped at 146.60-70, as market participants looked for more clues to extend the pair’s two-day losing streak. Even so, upbeat Japanese data and a pullback in government bond yields joined with cautious optimism to weigh on the risk barometer ahead of U.S. economic activity data for August.
Earlier in the day, Japan’s Jibun Bank’s manufacturing PMI rose to 49.7 in August from 49.6 vs. 49.5 expected, while services PMI rose to 54.3 from 53.8 previously.
On the bond coupon front, U.S. 10-year Treasury yields fell back to 4.31% from their highest level since late 2007, while Japanese government bond (JGB) yields struggled near 2014 levels.
Bank of Japan (BOJ) Governor Kazuo Ueda avoided discussing details of Tuesday’s meeting with Japanese Prime Minister Fumio Kishida, which he described as a “routine” meeting. However, BOJ Governor Haruhiko Kuroda did mention that he explained the BOJ’s July policy decision to the prime minister.
On the other hand, US existing home sales in July and Richmond Fed manufacturing index in August improved slightly, which in turn should attract USD/JPY sellers. However, hawkish speeches from Richmond Fed President Thomas Barkin supported the pair.
Elsewhere, hopes of improving U.S.-China relations and an upbeat performance by Japan’s benchmark stock index, the Nikkei, appeared to protect risk-takers and weighed on USD/JPY amid uncertainty over major central banks’ next moves.
USD/JPY will be guided intraday by U.S. PMI numbers for August and flash existing home sales for July, along with US and China headlines and bond market moves. However, Friday’s Tokyo consumer price index for August and speeches by top central bankers at the annual Jackson Hole symposium will be the main focus for clarity.
