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James Hyerczyk
USD/JPY

The Dollar/Yen is down sharply on Friday as a plunge in global equity markets and commodities sent investors scurrying for protection in the safe-have Japanese Yen. The catalyst for the move is the news that President Trump had contracted COVID-19. The news triggered a volatile move in the financial markets and thrust COVID-19 back into the spotlight for investors.

At 08:15 GMT, the USD/JPY is trading 105.185, down 0.376 or -0.36%.

The White House announcement is expected to heighten existing political uncertainty around the U.S. election on November 3, another major risk event for markets. Jeff Henriksen, co-founder and CEO of Thorpe Abbotts Capital called the president’s positive test a “game changer” for market behavior in the short term.

House passes $2.2 Trillion Democratic Coronavirus Stimulus Bill

The House passed a $2.2 trillion Democratic coronavirus stimulus plan on Thursday night even as Democrats and the Trump administration struggle to strike a relief deal.

The bill likely will not get through the Republican-held Senate and become law. Senate Majority Leader Mitch McConnell has opposed the legislation as his caucus resists spending trillions more on the federal response to the pandemic.

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Japan’s Jobs Market Worsens in August as Coronavirus Damage Persists

Japan’s unemployment rate rose in August to its highest in over three years and job availability fell to a more than six-year low, government data showed on Friday, indicating damage caused by the COVID-19 pandemic persisted through the month, Reuters reported.

Japan’s seasonally adjusted jobless rate rose to 3.0% in August, the highest since May 2017, labor ministry data showed. The result met analysts’ median forecast of 3.0%.

The data showed about 2.06 million people lost their jobs in August, 490,000 more than in the same month a year earlier, and marking the seventh consecutive month of increase.

Compared with the previous month, however, the number of employed workers rose by 110,000 people in seasonally adjusted terms – the fourth straight month of gain.

The jobs-to-applicants ratio fell to 1.04, matching a level last seen in January 2014. It compared with 1.08 in July, and a median forecast of 1.05.

Daily Forecast

Overnight, investors responded to the President’s positive COVID-19 test as expected. They sold risky assets and bought the traditional safe-havens – bonds, the dollar and the Japanese Yen.

Traders will also monitor nonfarm payrolls and unemployment figures due at 12:30 GMT. There will also be consumer sentiment and factory orders released at 14:00 GMT.

The direction of the USD/JPY over the short-run will be determined by how the U.S. stock market responds to the Trump’s COVID-19 news.

Trump’s diagnosis could force investors to focus on the coronavirus pandemic once again and dampen hopes of an economy recovery while raising fears of a “second wave”. It all actually comes down to whether the buying of growth-oriented companies can offset the losses expected in companies that need a recovery to do well.

For a look at all of today’s economic events, check out our economic calendar.
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