USD/JPY retreats from yearly highs above 112.00 amid lower US T-bonds yields

USD/JPY consolidate gains on the last trading day of the week. The pair posted a fall of more than 70-pips in the overnight session after it peaked near 112.00. At the time of writing, USD/JPY is trading at 111.29, up 0,01% for the day.

The US benchmark 10-year Treasury yields fell 4 basis points 1.49%, after testing the high of 1.56% this Tuesday about the concern of higher inflation and the prospect of tighter monetary policy. The US Fed Chair Jerome Powell said on Thursday that inflation pressure from the pandemic could last longer than previously anticipated, although he still believes that they will be transitory. In addition, US Treasury Secretary Janet Yellen warned again that any default on US debt would cause irreparable damage as well as an ensuing financial crisis if legislators failed to Act.

The US Dollar Index (DXY), which tracks the performance of the greenback against six major currencies, trades near 94.30 with 0.08% losses. Meanwhile, House Speaker Nancy Pelosi reaffirmed her confidence in the vote on a bipartisan infrastructure bill, even as members of her own Democratic leaders said lack of support to progress to pass the bill. On the economic data side, the US Weekly Jobless Claims rose to 362K in the week ending on September 25, against the market expectations of a decline of 335K whereas the Gross Domestic Growth (GDP) rose by 6.7% in Q2.

On the other hand, the Japanese yen gains on its safe-haven appeal, despite concerns over the pace of economic recovery in China and Japan. Industrial output declined in August whereas Retail sales fell by 3.2% in August against the market expectations of a 1% drop. Furthermore, the Bank of Japan (BOJ) Governor Haruhiko Kuroda said that the central bank will continue to support Japan’s economic recovery with its massive stimulus.

As for now, traders are waiting for the slew of data: Japan’s Unemployment Rate, Tankan Large Manufacturers Index, BOJ Summary of Opinions, US Personal Spending and Income, PCE Price Index, and ISM Manufacturing PMI to gauge the market sentiment.

USD/JPY additional levels