USD/JPY remains under pressure at 1-year lows

• USD remains weak on a risk-off session on trade war concerns. 
• USD/JPY consolidates at lowest since November 2016. 

USD/JPY moved modestly off daily lows but continues under pressure as equity prices in Wall Street show important losses. The yen is outperforming on Friday and also over the week on the back of risk aversion. 

Equity prices in the US are adding to weekly losses. The Dow Jones is falling 1.19% and the Nasdaq drops 0.60%. The negative tone started yesterday after US President Trump announced tariffs on import of steel and aluminum. Today he even mentioned a “trade war” increasing market concerns. US bonds are rising with the decline in yields helping the yen. The 10-year fell below 2.80%. 

To yen’s strength contributed Kuroda’s comments earlier today. Bank of Japan Governor mentioned that the exit of the QQE program could start when inflations hits 2%, expected to happen during FY 2019. 

Consolidating losses 

USD/JPY moved marginally to the upside during the last hour after the release of US Consumer Sentiment data. The index came in at 99.7 for February above the 99.5 expected. 

The pair bottomed earlier today at 105.23, the lowest since November 2016. Since then it has been moving in a range between 105.50 and 105.25, consolidating a weekly loss of 150 pips. It spiked at 105.55 after US data but failed to hold and pulled back to the range.