- USD/JPY has dropped as the yen makes a comeback in a drop in yields.
- The yield on the US 30-year bond fell to its lowest level since late February.
USD/JPY was ending on Wall Street down 0.4% to 110.26 having attempted to correct from the 110.16 lows after falling from a high of 110.82.
The yen strengthened in late London as the yield curves flattened led by a strong rally in US medium and longer-dated securities as US inflation expectations fell back sharply in the aftermath of the Federal Open Market Committee meeting.
The US 10-year yield fell sharply from 1.5940% to a low of 1.4690%, ending the day down -4.00%.
The yield on the US 30-year bond fell to its lowest level since late February.
''The market is clearly of the conviction that the rise in inflation is transitory and that the Fed dot plot implies a flatter curve,'' analysts at ANZ bank explained.
''Equities were mixed amid a firmer policy rate outlook and flattening curves.''
Casting minds back to the latest data reported by CFTC earlier this week that covered the release of May’s jobs data in the US, where a below-consensus headline number prompted markets to factor in more time before the Fed could start to turn less dovish, we are seeing the same reaction in today's moves.
This had lead to the improvement in JPY positioning (from -29% to -23% of open interest).
''Indeed, the rise in US yields in the first months of 2021 was the main trigger of a sharp increase in JPY net-short positions, as markets likely frontloaded a more extended bond underperformance,'' analysts at Rabobank explained.
''JPY remains the most oversold currency in G10, with a net positioning of -23% of open interest, having recorded a -48% of open interest drop since the start of the year. This suggests there is still room for the currency to benefit from further short-squeezing.''
For today, Japan’s May Consumer Price Index data are released at and Bank of Japan’s policy announcement for June is also due.
|Today last price||110.27|
|Today Daily Change||-0.44|
|Today Daily Change %||-0.40|
|Today daily open||110.71|
|Previous Daily High||110.72|
|Previous Daily Low||109.8|
|Previous Weekly High||109.84|
|Previous Weekly Low||109.19|
|Previous Monthly High||110.2|
|Previous Monthly Low||108.34|
|Daily Fibonacci 38.2%||110.37|
|Daily Fibonacci 61.8%||110.15|
|Daily Pivot Point S1||110.1|
|Daily Pivot Point S2||109.5|
|Daily Pivot Point S3||109.19|
|Daily Pivot Point R1||111.02|
|Daily Pivot Point R2||111.33|
|Daily Pivot Point R3||111.94|
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.