USD/JPY advances to highest level since May near 109.50
|- 10-year US T-bond yield adds nearly 7% on Thursday.
- The US reportedly confirms the phase-one trade deal will include tariff rollbacks.
- US Dollar Index pushes higher above the 98 handle.
The USD/JPY started the day below the 109 handle on Thursday and spent the Asian session in a calm manner but rose sharply during the European trading hours after China's Commerce Ministry said that the United States and China have agreed to roll back tariffs.
Trade optimism weighs on safe-haven assets
With the risk-on flows continuing to dominate the market action during the American session, the pair preserved its bullish momentum and advanced to its highest level in more than five months at 109.48. As of writing, the pair was trading at 109.43, adding 0.4% on a daily basis.
Confirming the statement from China, citing a source familiar with talks, Bloomberg on Thursday reported that the US side recognized that the phase-one of the trade deal with China will include mutual reductions in import tariffs. Reflecting the strong risk appetite, the 10-year US Treasury bond yield surged to its highest level since early August and was last up 6.5% on the day. Additionally, Wall Street's three main indexes are flirting with all-time highs.
On the other hand, the selling pressure surrounding the EUR and the GBP on Thursday allows the USD to find demand and causes the bullish momentum to remain intact.
Leading Economic Index and Coincident Index data will be released from Japan on Friday but the risk perception is likely to continue to impact the pair's movements. Wholesale Inventories and the University of Michigan's Consumer Confidence Index will be featured in the US economic docket.
Technical levels to watch for
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