- USD/JPY pares losses and reclaims the 110.80 mark on Monday.
- Higher US Treasury yields underpin the demand for the US dollar.
- Yen remains sidelined as economic growth is lagging behind its counterparts.
After touching a multi-month high in the previous week, USD/JPY retreats towards 110.50 but manages to recover losses on Monday. The pair moves in a very narrow trade band with modest gains.
At the time of writing, USD/JPY is trading at 110.81, up 0.03% for the day.
The US Dollar Index( DXY), which measures the performance of the greenback against its six major rivals, remains stout near 91.80. The greenback touched a high of 92.36 in the prior week, the levels last seen in April but failed to hold onto higher levels and consolidated in a range of 91.50-91.90.
The US 10-year benchmark yields rebounded from the four-month lows of 1.36% to trade at 1.55% on Monday. The US dollar moves in tandem with the Treasury yields, however, with little traction.
The sluggish movement in the US dollar traced back to mixed economic data and fears of reflation trade as investors analyzed that the Fed would stick to its current ultra accommodative monetary policy stance, despite rising pricing pressures.
US Consumer Spending was unchanged in May, missed the market expectations of a 0.4% growth. Personal Income fell 2% in May as compared to market consensus at 2.5%.
Fed’s preferred gauge of inflation, the US Personal Consumption Expenditure Index (PCE) rose 0.5% in May and 3.4% over the last twelve months. The subdued readings subsided inflation anxiety and reaffirmed Fed’s dovish outlook. This, in turn, kept gains limited for the greenback.
Meanwhile, a breakthrough in infrastructure spending talks in Washington in the earlier week added to the attractiveness to the US dollar and held the lower ground.
On the other hand, the Japanese yen remains pressurized as investors increase their investment in the US dollar. The policymakers remain concerned that some sectors in the economy are experiencing weakness and remain in severe situations due to the COVID-19, despite an optimistic outlook owing to government spending.
The growth differentials in the US and Japan weigh on the prospects of the yen.
As for now, investors are waiting for the Bank of Japan (BOJ) Summary of Opinions and the US Dallas Fed manufacturing Index to gain some fresh trading impetus.
USD/JPY additional levels
Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer. Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.
Recommended content
Editors’ Picks
EUR/USD retreats below 1.0850 ahead of Fedspeak
EUR/USD stays under modest bearish pressure and trades in negative territory slightly below 1.0850 after closing modestly lower on Thursday. In the absence of macroeconomic data releases, investors will continue to pay close attention to comments from Federal Reserve officials.
GBP/USD stays under modest bearish pressure near 1.2650
GBP/USD edges lower toward 1.2650 after posting marginal losses on Thursday. The US Dollar holds its ground following the selloff seen after April inflation data and makes it difficult for the pair to gain traction. Fed policymakers are scheduled to speak later in the day.
Gold holds steady above $2,380, Fed speakers in focus
Gold trades with a positive bias on Friday and holds above $2,380. The benchmark 10-year US Treasury bond yield stays flat near 4.4% following Thursday's rebound, allowing XAU/USD to keep its footing ahead of speeches from Fed officials.
XRP steadies at $0.51 as Ripple plans to expand XRP Ledger, custody services in Africa
Ripple hovers close to $0.51 on Friday, above the psychologically important $0.50 level, as traders await the court ruling of the lawsuit against the US SEC and amid new commitments from the firm to expand its services in Africa.
Disputes and De-risking: US-China trade dispute changes trade flows
The bilateral trade dispute between the US and China is entering a new round and is leading to renewed discussions about the deglobalisation of global trade in goods.