USD/JPY holding form following spike in oil markets

• The yen is quiet in Asia as markets consolidate the Wall Street session's rally in USD/JPY.
• USD/JPY was rallying on solid US stocks and a spike in oil prices overnight.

USD/JPY is relatively bid in Asia despite the risk-off tones circulating which would usually keep the yen underpinned. There are concerns over the Japanese outbreak of COVID-19 which would potentially jeopardise the yen's safe-haven allure to many. At the time of writing, USD/JPY is trading at 108.02 having ranged between 107.80 and 108.19. 

Overnight, USD/JPY was quiet until Wall Street kicked in, rallying on solid US stocks and a spike in oil prices which lifed the pair from 107.20 to around 108. US President Donald Trump tweeted that he had held a constructive call with the Saudi Crown Prince and expected OPEC+ with Russia to agree to substantial oil production cuts of 10-15mn barrels per day. More on that here: 

• Trump: Hopes Russia, Saudi Arabia will reach deal to cut production by as many as 15 mln bpd soon

• Oil Asia Price Forecast: US President Trump tweet makes WTI jump 25%

• Wall Street Close: Chevron and Exxon helped to lift DJIA 450 points

Meanwhile, the cases of COVID-19 have surpassed the million mark and Japan is now facing a spike in cases as well. The country's COVID-19 fighting team has been sent back to the drawing board and lockdowns with fiscal stimulus will be back in play. The yen will likely be vulnerable under these circumstances as the markets once again focus on the economy's fragility, a deterrent for the currency. Also, the Bank of Japan is limited to what it can other than continuing to practise its unorthodox monetary easing and buying of ETF’s.

• Breaking: COVID-19 cases surpass 1M worldwide with over 50,000 death toll

As for the US data, "US initial jobless claims for the week to 28th March surged to another record, 6.648 million after the prior week’s 3.307 million (revised from 3.283mn), a 2-week total of almost 10 million jobless claims. The median forecast was 3.76mn but the outcome was within the wide band of analyst estimates," analysts at Westpac explained. 

Cumulatively, this puts initial claims over the past two weeks at just under the 10 million mark. During the GFC, non-farm payrolls fell by 8 million, though these don’t map exactly. It all points to a significant rise in the unemployment rate,

– analysts at ANZ noted.

USD/JPY levels

• USD/JPY Forecast: Modest recovery lacks follow-through