USD/JPY Weighed Down by Performance in Stocks

The dollar struggled for direction against the yen Tuesday with bullish economic data overshadowed by periodic selling pressure on equities and slight back-up of Treasury yields that dampened demand for the U.S. currency. The dollar was only fractionally higher against the euro and sterling which flatlined at 1.2161 for nearly the entire North American session.

USD/JPY was under heavy selling pressure during the Asian session, dropping to a low of 115.15 before rebounding back to 116.50 by the U.S. open. The early gains were compromised by a soft open at the NYSE before a bounce to 116.00 followed upbeat labor market and wholesale trade data. But unable to take out 116.00, the dollar faded back to 115.70 where it spent the remainder of the day, closing with a loss of 0.33%.

Sterling started out the day on the back foot as concerns of a “hard Brexit” continued to weigh on the British pound. Remarks on Monday by UK Prime Minister Theresa May was the catalyst for a decline to 1.2107, but the lack of follow-through below 1.2100 enabled sterling to grind back to 1.2168 for a very small gain over the dollar.

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