USD/JPY drops to two-week lows near 109.30

• 10-year US Treasury bond yield erases nearly 3% on Friday.
• Wall Street's main indexes suffer losses following positive start.
• US Dollar Index climbs to fresh multi-week highs after PMI data.

The USD/JPY pair reversed its direction during the American trading hours as the risk-off atmosphere allowed the JPY to find demand as a safe-haven. As of writing, the pair was trading at 109.27, erasing 0.2% on a daily basis. For the week, the pair is losing around 80 pips.

JPY capitalizes on risk aversion

Although it looked like worries over the coronavirus becoming a worldwide epidemic were easing with the World Health Organisation announcing that it had not yet become a global health emergency, reports of confirmed cases in the United States seems to be forcing investors to stay away from risk assets ahead of the weekend.

The Centers for Disease Control (CDC) on Friday confirmed that out of 63 patients under investigation from 22 states, to date; 2 have tested positive for coronavirus.

Reflecting the dismal market mood, the 10-year US Treasury bond yield is down 2.95% on the day while Wall Street's main indexes, which opened the day in the positive territory, are down between 0.6% and 0.9%. 

On the other hand, the greenback gathered strength after the data published by the IHS Markit showed that the economic activity in the private sector continued to expand at a robust pace in January in the US with the Composite PMI rising to 53.1 from 52.7. The US Dollar Index advanced to its highest level since early December at 97.95 to help the pair keep its losses limited. At the moment, the index is up 0.22% on the day at 97.90.

Technical levels to watch for