USD/JPY extends slide to 109.70 amid risk aversion
- Sharp increase in new coronavirus infections triggered flight-to-safety.
- 10-year US Treasury bond yield erases more than 3% on Thursday.
- US Dollar Index stays calm below 99 ahead of inflation data.
The USD/JPY pair failed to close the day above the critical 110 handle on Wednesday and came under renewed bearish pressure amid resurfacing concerns over the coronavirus outbreak. With risk-off flows helping the JPY find demand as a safe-haven, the pair slumped to a daily low of 109.61. As of writing, the pair was down 0.35% on the day at 109.70.
Coronavirus headlines weigh on sentiment
China has announced that the number of confirmed coronavirus infections rose more than 14K on Wednesday to bring the total number above 60,000. Although this huge jump in cases was reportedly caused by a change in the counting method, the market sentiment turned sour as investors realized that the severity of the outbreak was worse than initially anticipated.
"We understand that new case definition includes clinically diagnosed cases based on symptoms and exposure, as well as lab-confirmed cases," a spokesperson for the World Health Organization (WHO) explained on Thursday but failed to improve the sentiment.
Reflecting the risk-off atmosphere, the 10-year US Treasury bond yield is down 3.7% on the day and major European equity indexes are erasing more than 1%.
In the second half of the day, the US economic docket will feature the Consumer Price Index (CPI) and weekly Jobless Claims data. Markets are likely to keep a close eye on Wall Street's performance.
Technical levels to watch for