USD/JPY snaps two-day winning streak near 140.00 on mixed Japan data, upbeat yields

• USD/JPY pares intraday losses, the first in three, amid mixed catalysts.
• Japan’s Annualized GDP revised higher for Q1 but other growth signals remain sluggish.
• Yields grind higher amid concerns about economic slowdown, higher rates from key central banks.
• Second-tier US, Japan data and risk catalysts eyed for clear directions.

USD/JPY licks its wounds around the 140.00 psychological magnet during the first loss-making day in three as Tokyo opens for trading on Thursday. In doing so, the Yen pair struggles to justify upbeat Treasury bond yields amid mixed data at home.

That said, Japan’s Gross Domestic Product (GDP) slipped to -0.3% in the first quarter (Q1) of 2023, versus 0.5% expected and 0.4% prior. However, the GDP Annualized got a strong upward revision to 2.7% versus 1.9% market estimation and 1.6% prior readings. It should be noted that the Current Account balance also came in better-than-forecast with
¥1,895.1B figures for April and the Bank Landing rose in May whereas the Trade Balance - BOP Basis improves to ¥-113.1B in April.

“Japan's economy grew more than initially thought in January-March, revised data showed on Thursday, as a post-pandemic pickup in corporate and consumer spending helped offset the hit to exports from slowing global demand,” said Reuters after data.

Elsewhere, the benchmark US 10-year Treasury bond yields rose the most in five weeks to 3.79% while the two-year counterpart marched to 4.52% at the latest. That said, the US 10-year bond coupons remain mostly unchanged at 3.79% by the press time whereas the two-year yields grind higher to 4.54% as we write.

It should be noted that recent challenges to the major economies, as perceived from the latest downbeat statistics from the top-tier economies, renew recession fears and weigh on the USD/JPY price. Adding strength to the economic pessimism are the concerns surrounding higher interest rates from the headline central banks, especially after the latest hawkish surprises from the Reserve Bank of Australia and the Bank of Canada (BoC).

On Wednesday, Bank of Japan (BoJ) Governor Kazuo Ueda said, “When achievement of price target is foreseen, we will discuss specifics of an exit policy and disclose information as needed.”

Against this backdrop, Wall Street closed mixed and S&500 Futures struggle for clear directions.

Looking ahead, second-tier statistics from the US and Japan may entertain the USD/JPY traders. However, risk catalysts and fears of higher rates, as well as economic slowdown concerns, can lure the Yen pair sellers.

Technical analysis

A one-week-old bullish pennant, currently between 140.20 and 139.20, restricts immediate USD/JPY moves amid upbeat oscillators.