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USDJPY attempts to retake 146.00 amid rising rates and midterm election worries in the United States
USDJPY recovers from a two-week low to post its first gain in four days. Treasury yields recover from the previous day's losses as fears of US government deadlock combine with economic worries and China covid concerns. In the first half of the fiscal year, Japan's current account surplus declines, but improves in September. US inflation, reports from the midterm elections will be essential for near-term directions.
The USDJPY rebounds somewhat from a two-week low around 145.70-80 in Asia on Wednesday morning. As a result, the Yen pair reverses a three-day slump under the cautious market sentiment.
In spite of this, hope is waning as the latest updates from the US midterm elections indicate government impasse. In conjunction with the Republican demand for a debt ceiling increase, this accentuates the dread of rising interest rates.
The worsening coronavirus situation in China also contributes to the current risk aversion, as well as to the USDJPY exchange rate. China announces the largest number of new COVID cases in six months, with 8,335 new cases reported for November 8, while Guangzhou's second area remains under quarantine.
It should be highlighted that Japan recorded a substantial Current Account surplus for the month of September, but failed to overlook the steepest drop in the surprise for the first half of the current fiscal year (FY) since 2008. In addition, rumors of intervention by the Bank of Japan (BOJ) and the recent softening of US data joined mixed concerns at the Fed to increase US Treasury yields and USDJPY prices in recent days.
In response to these factors, the rates on the 10-year US Treasury note regain upward momentum and surpass 4.14 percent, while the yields on the 2-year note post modest gains near the 4.62 percent mark. It should be mentioned that despite Wall Street's three-day upswing, US stock futures posted slight losses while Asia-Pacific shares closed in the negative.
Ahead of Thursday's release of the US Consumer Price Index (CPI) for October, political and covid updates may entertain USDJPY traders. The 50-day simple moving average protects USDJPY purchasers near 145.50, but the recovery requires confirmation from a three-week-old resistance line near 147.45.
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