USD/JPY holds in positive territory as USD battles back

USD/JPY is steady in the Tokyo open on Thursday following a choppy last day of Japan’s financial year as the US dollar sank.

The pair was falling just short of the 111 area with the US dollar giving back some substantial ground across the board. 

As measured by the US dollar index, DXY, the price dropped to a low of 92.98 and then rebounded to test 4-hour resistance around 93.20.

At the time of writing, USD/JPY is trading at 110.70 having travelled between a low of 110.65 and a high of 110.80. 

Meanwhile, US treasury yields continued to climb on the last day of the quarter following the announcement of President Biden’s $2.25trn infrastructure spending plan.

Biden said there would be no tax rises for those making less than $400k per year while he pledged to hike corporate tax rates to 28%. This will be hard to get through Congress. 

In any case, the 2-year government bond yields rose from 0.14% to 0.16%, the 10-year yields climbed from 1.71% to 1.75%.

''President Biden released his well-flagged stimulus plan targeting transportation, renewable energy, manufacturing and climate change,'' analysts at Westpac explained.

''The $2.25 trillion package of spending over the next eight years is in addition to the $1.9 trillion economic relief bill passed earlier this month. Spending would be funded by increased taxes: corporate taxes to 28% from 21%, and taxes on corporate earnings overseas to 21% from around 13%.''

Now, the focus turns to this Good Friday's US jobs numbers.

The Nonfarm Payrolls will be the showdown to start the new month.

On Wednesday, the US private sector employment (ADP) rose 517k in March (vs. 550k expected, 176k prior).

Despite being a slight miss, it shows that the economy could be turning a corner and is a positive prelude for Friday's jobs numbers and potentially supportive for the greenback. 

Also, February was partly affected by bad weather and additional unemployment benefits.