USD / JPY up 0.2% to 113.08
After a noticeable drop at the start of the week, USD / JPY finds a slight base around 112.70-80 as bond yields climb so far today. The pair is back just above 113.00 although sellers are firmly under control in the near term (key hourly moving averages @ 113.39-67).
10-year Treasury yields are up 2.6 basis points to 1.475%, helping to ease the pressure on the yen pairs in recent sessions.
Bond traders are also struggling around key technical levels as shown above with the 100 and 200 day moving averages in play for 10 year Treasuries right now.
The inflation debate is going to be a long and drawn-out battle over the next few weeks / months, and we will not get easy answers as the market will slowly and gradually form an opinion based on economic data.
As such, the constant push and pull of bonds is arguably going to make things a bit tricky – especially with market participants a bit nervous ahead of key releases like today’s, namely the report on US consumer inflation.
Coming back to the USD / JPY, this has been a modest halt to the downside over the past few days, but continue to keep an eye on the bond market as it remains the main driver for now.
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