- USD / JPY rose to a new yearly on Friday, breaking above resistance at 109.30 to hit session highs at 109.80.
- USD / JPY got the boost it needed from a rally in US government bond yields that widened the US rate differential..
The USD/JPY It rose to new highs for the year on Friday, breaking above resistance at 109.30 to post session highs at 109.80. The pair has now pulled back a bit, but is still trading above the 109.50 mark. That equates to daily gains of roughly 40 pips or just under 0.4%. On the week, the pair is now trading with gains of around 0.7%.
Performance of the day
USD / JPY received the impetus it needed to break above the range touched on Friday; US government bond yields, which have undoubtedly retreated from previous highs, saw a substantial rise on Friday, with 10-year yields climbing as much as 1.68% from overnight levels around 1.62%. The subsequent widening of the US / Japan rate spread was the necessary catalyst to push USD / JPY back above 109.30 and towards new yearly highs. As yields recede, the pair retreats with par.
The combination of unfavorable movements in global bond markets (which have further increased the drop in Japanese rates), combined with a sense of increased risk in trading (global equities, crude oil markets, and risk-sensitive currencies, all trading decent gains on the session) are weighing on the safe-haven JPY, making it to the bottom of the G10 performance chart on the day. A modestly stronger-than-expected March core CPI reading for Tokyo released last night has not helped the yen and showed that the Japanese economy remains in deflation with prices falling 0.1% year-on-year.
Going forward, USD / JPY will have to deal with end-of-quarter rebalancing flows early next week and could be oscillating thereafter. But there will also be a host of crucial data releases from both the US and Japan to keep an eye on; on Tuesday, February retail sales data in Japan was released, on Wednesday, the US March ADP national employment and February Japan industrial production will be released, on Thursday, the Manufacturing Survey data Japan’s Q1 Tankan and US ISM / US NFP Manufacturing PMI Survey (and Good Friday holiday, so an early close).
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.
