USD/JPY licks its wounds near intraday low, at 135.50 during Thursday’s European morning. The yen pair’s latest weakness could be linked to the mixed PMI data from Japan, as well as on chatters that the Bank of Japan’s (BOJ) Yield Curve Control (YCC) policy is under threat.
Japan’s Jibun Bank Manufacturing PMI eased to 52.7, below 54.4 expected and 53.3 prior, whereas the Services counterpart rose past 52.2 forecasts and 52.6 previous readouts to 54.2.
It’s worth noting that the downbeat performance of the US Treasury yields, recently pressured around 3.15%, also weighs on the USD/JPY prices. It should be noted that the US 10-year Treasury yields dropped the most in one week the previous day, poking the fortnight low of late.
Elsewhere, the Financial Times (FT) portrayed challenges to the BOJ’s status quo by citing the exodus of foreign investors from the Japanese bond markets. “Foreign fund managers’ renewed enthusiasm for wagers against Japanese government bonds — a trade that has backfired so frequently over the past two decades it earned the nickname ‘widow-maker’ — also puts them at odds with the majority of Japanese investors who think the BoJ will stick to its guns despite the collapse of the yen to a 24-year low,” said the FT.
It’s worth noting that four-month low inflation expectations in the US and Fed Chair Jerome Powell’s Testimony in favor of the current monetary policy also weigh on the USD/JPY prices. That said, the US inflation expectations, as per the 10-year breakeven inflation rate per the St. Louis Federal Reserve (FRED) data, dropped for the third consecutive day to the fresh low since late February, at 2.54%, by the end of Wednesday’s North American session. On the other hand, Fed’s Powell considered the present monetary policy bias appropriate to battle the inflation woes. It’s worth noting, however, that the Fed Boss’s readiness to use the aggressive measures, irrespective of their consequences, seemed to have put a floor under the greenback. On the same line is the latest news from Reuters signaling an upbeat print of June’s jobs report.
To sum up, the market’s inaction, mostly sluggish performance, keeps the USD/JPY on thin ice ahead of US S&P Global PMIs for June and the second round of Fed Chair Jerome Powell’s Testimony.
Although overbought RSI conditions and bearish spinning top favor USD/JPY sellers, multiple supports around 134.50 restricts the short-term downside of the yen pair.
Risk Warning: Trading Forex and CFDs on margin carries a high level of risk and may not be suitable for all investors. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75.72% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Prior to trading, you should take into consideration your level of experience and financial situation. TeleTrade strives to provide you with all the necessary information and protective measures, but, if the risks seem still unclear to you, please seek independent advice.
© 2011-2022 Teletrade-DJ International Consulting Ltd
Teletrade-DJ International Consulting Ltd is registered as a Cyprus Investment Firm (CIF) under registration number HE272810 and is licensed by the Cyprus Securities and Exchange Commission (CySEC) under license number 158/11.
The company operates in accordance with the Markets in Financial Instruments Directive (MiFID).
The content on this website is for information purposes only. All the services and information provided have been obtained from sources deemed to be reliable. Teletrade-DJ International Consulting Ltd ("TeleTrade") and/or any third-party information providers provide the services and information without warranty of any kind. By using this information and services you agree that under no circumstances shall TeleTrade have any liability to any person or entity for any loss or damage in whole or part caused by reliance on such information and services.
TeleTrade cooperates exclusively with regulated financial institutions for the safekeeping of clients' funds. Please see the entire list of banks and payment service providers entrusted with the handling of clients' funds.
Teletrade-DJ International Consulting Ltd currently provides its services on a cross-border basis, within EEA states (except Belgium) under the MiFID passporting regime, and in selected 3rd countries. TeleTrade does not provide its services to residents or nationals of the USA.