USD/JPY tracks downbeat yields to drop further below 130.00
|- USD/JPY takes offers to refresh intrday low, signals first weekly losses in 10.
- US Treasury yields fail to cheer hot inflation amid mixed Fedspeak, stock futures print mild gains.
- BOJ Summary of Opinions back easy money policy but highlights risks emanating from Ukraine.
- Risk catalysts may entertain traders amid the absence of top-tier data.
USD/JPY renews daily lows around 129.55 while stretching the previous day’s losses, amid downbeat yields, as Tokyo opens on Thursday. The yen pair’s weakness could also be linked to the Bank of Japan’s (BOJ) Summary of Opinions and the market’s consolidation.
US 10-year Treasury yields dropped 1.4 basis points (bps) to 2.90% at the latest, around a two-week low by the press time. In doing so, the benchmark bond coupons drop for the fourth consecutive day.
The yields failed to cheer higher-than-expected US inflation data as the Fedspeak turned out mixed of late. That said, the headline Consumer Price Index (CPI) rose to 8.3% YoY versus 8.1% expected and 8.5% prior. More importantly, the CPI ex Food & Energy, better known as Core CPI, crossed 6.0% forecasts with 6.2% annual figures, versus 6.5% previous readouts.
Following the data, Fedspeak turned out to be mixed as the previously hawkish Federal Reserve Bank of St. Louis James Bullard mentioned that he ''won't emphasize single inflation report too much but inflation is more persistent than many have thought.'' However, Cleveland Fed President and FOMC member Loretta Mester previously recalled the bears as she said, “They don't rule out a 75 basis points rate hike forever”.
On a different page, the BOJ Summary of Opinions reiterated the policymakers’ favor for easy money while also saying, “It is inappropriate to adjust monetary policy while the Ukraine crisis adds to the economy's already existing adverse risks.”
Elsewhere, the European Union’s (EU) readiness for further sanctions on Russia and China’s covid are extra catalysts that allow the yen to cheer its traditional safe-haven status, especially when the USD and the yields are troubled.
Moving on, weekly prints of the US Jobless Claims and monthly Producer Price Index (PPI) will decorate today’s calendar and hence major attention will be given to the qualitative catalysts for clear directions. Given the downbeat yields, USD/JPY bears are hopeful.
Technical analysis
Although a clear downside break of a six-week-old ascending trend line keeps USD/JPY bears hopeful, the 100-SMA and April 19-20 swing high surrounding 129.40 restricts the pair’s immediate downside.
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