USD/JPY: bears take charge in the Tokyo open

Currently, USD/JPY is trading at 112.96, up 0.03% on the day, having posted a daily high at 113.11 and low at 112.91.

Forex today: bullish theme around the US economy, dollar unchanged

Bears are keen to protect territory on the 113 handle in the open of Tokyo, with a dip in the price below the figure after a strong performance on Wall Street again and a bid on USD/JPY to 113.09 the o/n high. However, the greenback finished flat in NY while 2yr yields rose from 2.55% to 2.57% while the US 10yr treasury yield rose from 2.30% to 2.35%. Fed fund futures yields are pricing the chance of a December rate hike at 92%. The DXY was unchanged on the day. 

However, US Treasury yields with the 2Y U.S.-Japan yield spread was extending its rally to a fresh post-crisis high around 170bpts and the highest since 2008. The 10Y spread is also reversing its recent drop and pushing back toward last week’s multi-month high around 230bpts.

A Fed hike for December and the chances of a more hawkish Fed Chair are driving forces at the moment. The Fed fund futures yields firming and the chance of a December rate hike now at 92%.

Data-wise, the Fed’s Beige Book was positive on the US economy and came across hawkish. Fed's Dudley said the biggest uncertainty is Washington's policy-making ahead of tomorrow's key vote on the budget in the Senate.

USD/JPY levels

USDJPY: The 4 hour charts suggesting prospect of more gains ahead

Jim Langlands at FX Charts explained that the dailies currently look less certain of the upside, and on the downside, support today should arrive at around 112.60 and then at the 200 HMA at 112.30. "The session low was at 112.12 which looks fairly safe, but back below 112.00, good support would be at 111.60/70.  Buying dips is preferred today although further out, with the dailies looking less positive, further range trade near current levels may be in store."