USD/JPY is flat in the Tokyo open having fallen from 106.30 to 105.74 after US ISM data that disappointed. USD/JPY is currently trading at 105.88, down by -0.04% having travelled between 105.82 and 105.98 in recent trade.

The US ISM manufacturing index arrived at 49.1 for August versus 51.2 in July which was the first sub-50 reading since August 2016 and is the weakest figure since January 2016. "This is a clear disappointment that will provide further fuel to the market and President Trump’s desire for further Federal Reserve interest rate cuts,'' analysts at ING Bank argued.

Subsequently, in fears of a looming recession, the US 2-year Treasury yields keeled over from 1.52% to 1.43% which was a two-year low while the 10-year yield from 1.51% to 1.43% which was a three-year low - ''Markets are pricing 29bp of easing at the 19 September Fed meeting, and a terminal rate of 0.90% (Fed funds rate currently 2.13%)" - according to analysts at Westpac.

USD/JPY levels

Valeria Bednarik, the Chief Analyst at FXStreet, notes that the USD/JPY pair is trading below the 38.2% retracement of its August decline at 106.30, and near the 23.6% retracement of the same decline at around 105.55.

Source: FXstreet