NZD/JPY erases Thursday's gains, sinking into 77.70

• The Kiwi treaded water against the Yen most of the day before resh tariff threats killed risk appetite heading into Friday's action.
• JPY data due for the early session could add to Yen buying if figures stoke risk aversion.

The NZD/JPY is dropping heading into the Tokyo session, sinking into 77.70 following Trump's announcement that he's seeking an additional $100 billion in tariffs against China.

The Kiwi managed to make it through Thursday without losing much ground against the Yen as broad markets rallied on the prospect of the US and China coming to a negotiated conclusion on the current tariff spat that is sapping all of the risk sentiment out of the markets. That relief rally was short-lived, and Asia markets are geared for a flight back into the Yen following the late Thursday announcement from the White House.

The pair is back into Thursday's lows ahead of Japan's Household Spending figures, due at 23:30 GMT (forecast 0.3 percent, previous 1.9 percent), to be followed by Japan's Leading Economic Index at 05:00 GMT early Friday (forecast 105.5, previous 105.6).

NZD/JPY Levels to watch

With the pair back in freefall on an escalation of tariff threats, a recovery will need to return to Thursday's highs at 78.20 before the way can be cleared to challenge the previous swing high at 78.60, while a continued sell-off will crash into support from the major 77.00 handle, with further support from the week's low point near 76.20.