USD/JPY stumbles post US PMI data

The USD/JPY pair is suffering the worst weekly performance since 2020. The pair accelerated the decline following the release of US economic data and bottomed at 135.56, reaching the lowest level in two weeks.

The pair hovers around 136.00, down 250 pips for the week. The Japanese yen is up across the board even as stock prices rise in Wall Street and Europe. The rally in bonds gained speed after the release of US data, adding fuel to the yen.

The US S&P Global Services PMI unexpectedly retreated in July to 47, down from 52.7 versus expectations of 52.6. It was the first reading under 50 since the pandemic. The S&P Manufacturing PMI fell less than expected to 52.3 against the market consensus of 52.

The indicator’s reading does increase fears about a potential recession and softened Fed rate hike expectations. Next week the US central bank will likely raise the Fed Funds rate by 75 basis points. At the same time, stocks reacted to the upside.