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USD/JPY falls to 134.00 as US Treasury yields decline
The USD/JPY accepts bids to retest the intraday low and reverses a one-week-old uptrend. Yields on US Treasury bonds recede from multi-day highs as markets consolidate in the midst of the holiday spirit. Fears originating from China and Russia join the BOJ's justification of its cheap money policy in order to maintain buyer optimism.
USD/JPY reverses from its best levels in over a week as bears welcome Thursday's Tokyo open declines in US Treasury yields. In doing so, the Yen pair posts its first daily loss in seven days, resetting its intraday low to approximately 133.90 at the time of publication.
In spite of this, US Treasuries drop from the multi-day high as traders await additional information while maintaining the most recent rally amid sluggish markets and a light schedule. In spite of this, 10-year US Treasury yields fall 1.3 basis points (bps) to 3.873% after reaching their highest level since November 14 the day before.
It should be noted that the benchmark US bond yields had their largest daily increase since late October on Wednesday, allowing the US Dollar Index (DXY) to post its second consecutive daily gain, reaching approximately 104.38 at the latest.
The prior increase in US Treasury yields may have been attributable to the market's lack of trust in China's opening as well as the geopolitical tensions surrounding Russia.
Previously, news from Reuters indicating contradictory virus information from Beijing and multiple economies announcing new testing requirements from China dragged on market sentiment and pushed US Treasury yields higher. Reuters reported that China reported three new COVID-related deaths on Tuesday, up from one on Monday. These numbers are contradictory with what funeral homes are reporting, as well as the experience of countries with considerably smaller populations when they reopened. In addition, the United States, South Korea, Japan, Taiwan, Italy, and India have all lately announced new Covid test requirements for Chinese tourists.
The most recent reports from the Ukrainian military and Russian agencies depict the escalation of geopolitical tension and drive demand for the US dollar as a safe haven. According to Reuters, the Ukrainian Military office reported that Russian forces increased mortar and artillery attacks on the city of Kherson more than six weeks after it was recaptured by Ukrainian troops, while also applying pressure along frontlines in the east. In this regard, Russia has already claimed that the only conceivable agreements account for the addition of four new regions.
Elsewhere, the Bank of Japan (BOJ) Summary of Opinions and the most recent statements from BOJ Governor Haruhiko Kuroda defy expectations of hawkish actions by the Japanese central bank and weigh on the JPY, which had previously boosted USD/JPY prices.
Moving forward, US Initial Jobless Claims will adorn the economic calendar, but the primary focus should be on US bond market movements for fresh impetus.
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