USD/JPY sank like a stone on a drop in US yields


  • 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.

 

USD/JPY

Overview
Today last price 110.27
Today Daily Change -0.44
Today Daily Change % -0.40
Today daily open 110.71
 
Trends
Daily SMA20 109.53
Daily SMA50 109.14
Daily SMA100 108.25
Daily SMA200 106.35
 
Levels
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

 

 

 

 

 

 

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