USD / JPY Traces Recovery In Yields To Rebound From a One-Month Low Toward 135.00, US Inflation, And BoJ Minutes Are Anticipated

USD / JPY makes a U-turn from the one-month low noted earlier in Asia, gaining bids to 134.50 during the first hour of Tokyo open on Monday. Despite this, the Bank of Japan (BoJ) Governor Haruhiko Kuroda's retirement has prompted hawkish demands for the next steps of the Japanese central bank. The cautious tone ahead of this week's top-tier data/events, such as the BoJ Minutes and the US consumer-centric numbers such as the Consumer Price Index (CPI) and Retail Sales for February, could also pose a challenge to pair purchasers.

The Yen pair's recent recovery may be attributable to the recently higher US Treasury bond yields as well as a risk-on market sentiment, primarily led by US regulators' efforts to control the financial market risks posed by Silicon Valley Bank (SVB) and Signature Bank. However, US 10-year Treasury bond yields recover from the largest daily loss in four months to near 3.75%, while S&P 500 Futures recover from a nine-week low.

The US Treasury Department, Federal Reserve, and Federal Deposit Insurance Corporation (FDIC) worked together over the weekend to mitigate the risks posed by SVB and Signature Bank. "All depositors of Silicon Valley Bank and Signature Bank will be entirely protected," the authorities said in a joint statement issued minutes ago.

"All depositors of Silicon Valley Bank and Signature Bank will be entirely protected," the authorities said in a joint statement issued minutes ago. Following the US government's late plan to contain the financial crisis, the S&P 500 Futures and US Treasury bond yields consolidate their losses from the previous day.

Despite the risk-on sentiment, rising hawkish wagers on the Bank of Japan's next move, particularly after Kuroda's retirement, appear to exert downward pressure on USD / JPY prices. After Friday's conflicting US employment data, observers of the Federal Reserve (Fed) may be similarly undecided. Consequently, the US Nonfarm Payrolls (NFP) increased by more than 205K in February, to 311K, compared to 504K (revised), while the Unemployment Rate increased to 3.6% for the month, compared to 3.5% expected and previously. Additionally, Average Hourly Earnings increased year-over-year but decreased month-over-month in February, whereas Labor Force Participation increased during the same month.

In the future, Wednesday's BoJ Minutes will be crucial in confirming the latest hawkish bias for the Japanese central bank's next move, which, if in line with market expectations, could impact on USD / JPY prices. The USD / JPY investors may return if the US consumer-centric numbers are stronger than expected advance of the crucial March Fed Open Market Committee (FOMC).