USD/JPY climbs to 108.30 supported by rising US T-bond yields
- 10-year US T-bond yield gains more than 1% on Thursday.
- Annual core CPI in June rises to 2.1% in the US.
- US Dollar Index steadies near 97 following Thursday's sharp fall.
The USD/JPY pair dropped below the 108 mark earlier in the day amid the broad-based USD weakness but didn't have a difficult time staging a rebound in the second half of the day. As of writing, the pair was trading at 108.30, still down 0.15% on the day.
The monthly data published by the U.S. Bureau of Labor Statistics today showed that inflation, as measured by the core Consumer Price Index (CPI), ticked up to 2.1% in June to come in higher than the market expectation of 2%. Supported by the CPI reading, the US Dollar Index gained traction and erased a portion of the fall that it recorded following FOMC Chairman Powell's cautious remarks yesterday.
Additionally, the 10-year US Treasury bond yield turned north in the second half of the day and rose more than 1% to provide an additional lift to the positively correlated USD/JPY pair. Finally, major equity indexes in the U.S. started the day in the positive territory to confirm the risk-on environment, which allows investors to pull away from safe-havens.
The trade balance data from China on Friday could impact the pair's action during the Asian trading hours if it were to cause a change in the market sentiment. Later in the day, the U.S. economic docket will feature the Producer Price Index (PPI) data.
Technical levels to watch for
Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
