JPY breaking away from US yields - AmpGFX

Sandeep Kanihama FXStreet Contributor

An interesting development is the run-up in the USD/JPY to new highs, breaking above what some people see as a three-year downtrend, even though US yields have moved sideways in the last month, according to Greg Gibbs, Analyst at Amplifying Global FX Capital.

Key Quotes

“The USD/JPY had appeared to re-connect with US yields since around March, after a period of disconnect in the first months of the year.”

“The USD/JPY had been incredibly tightly correlated with US yields (or the yield spread) from around mid-2016 to end-2017.”

“As such the market has gotten used to seeing USD/JPY and 10-year yields as moving in unison in recent years.”

“However, there was a significant divergence between the USD/JPY and yield spreads from early 2014 into the first half of 2016. This may have reflected the adjustment in USD/JPY to the relative pace of QE between the Fed and BoJ.”

Author

Sandeep Kanihama

FXStreet Contributor

Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.

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