The Japanese yen has posted considerable ground in the Thursday session. In North American trade, USD/JPY is trading at 112.40, down 0.66% on the day. In economic news, U.S. job employment numbers were soft. ADP nonfarm payrolls plunged to 179 thousand, well off the estimate of 196 thousand. This was the lowest level since May. Unemployment claims edged lower to 231 thousand, but this was higher than the estimate of 226 thousand. There was better news from the services sector, as ISM Non-Manufacturing PMI improved to 60.7, easily beating the estimate of 59.1 points. On Friday, the U.S. releases wage growth and nonfarm payrolls.
Global markets continue to spiral downward on Thursday, in what has been a dismal week for equities. Investor optimism over a 90-day truce between the U.S. and China, in which the U.S has agreed to suspend any new tariffs, quickly dissipated. Another concern for investors is an inverted yield curve of U.S Treasuries, which in the past has been a reliable indicator that a recession is coming. Investor jitters have boosted the Japanese yen, as investors have snapped up safe-haven assets like the yen.
A detente in the U.S-China trade war cannot come soon enough for the Japanese economy, as key sectors of the economy are showing signs of weakness. Japan’s manufacturing sector slowed down in November, raising concerns about the strength of the economy. Manufacturing PMI slipped to 52.2, down from 52.9 in October. The ongoing global trade war is a primary factor in the weak reading, as Japanese companies which export to the U.S. or China have been hurt by higher tariffs. A weaker eurozone economy has led to softer European demand for Japanese exports. Making matters worse, domestic demand remains fragile, as nervous consumers continue to hold tightly onto their purse strings.