- USD / JPY continues to trade below the 116.00 level on Thursday, failing to rally after aggressive Fed Minutes.
- Long-term US yields should continue to push higher if USD / JPY is to test late 2016 highs above 118.00.
- US 10-year yields rose sharply on the week but are still not above 2021 highs of around 1.77%.
After returning above 116.00 on Wednesday, but without testing Tuesday’s multi-year high of 116.40, the USD/JPY it has fallen on Thursday and has spent the last hours lateralized in the 115.75 area. The pair has failed to gain any momentum following the release of the more aggressive-than-expected Fed Minutes on Wednesday despite pushing US yields higher. Below that, technical indicators note further support in form highs of November 2021 and February 2017 at 115.50.
Some currency strategists are surprised by the inability of the dollar to recover in the wake of the Fed Minutes that clearly showed a strong appetite from the Fed for a faster pace of rate hikes and a more rapid balance sheet drawdown. Data from the US has been mixed this week in the run-up to the official December labor market report on Friday and has not weighed heavily on currency markets. Labor market data already released this week continues to support the idea that the US labor market is very tight and companies continue to struggle with staff / skills shortages, something expected to confirm data from the US. Friday. Tokyo’s consumer price inflation figures during Friday’s Asia Pacific session are unlikely to move the pair as inflationary pressure in Japan remains highly contained and unlikely to force the BoJ to deviate from its policy stance. ultra-moderate in the short term.
Some have suggested that the USD bulls could keep the dust dry ahead of the jobs report, which if as expected, could give the USD the green light to rally. However, as the yen is the G10 currency most sensitive to rate spreads, long-term US yields are likely to rise if USD / JPY wants to break above recent highs and test late 2016 highs above. from 118.00. Speaking of which, 10-year Treasury yields topped 1.70% on Thursday and is up more than 20 basis points on the week, but the key level that bond market participants are observing is the 2021 high in 1.77%.
Technical levels
.
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
