- 10-year US T-bond yield looks to close more than 5% lower.
- Wall Street's main indexes all lose more than 2% on Wednesday.
- US Dollar Index advances to 98 to limit pair's losses.
The USD/JPY pair retraced a large portion of Tuesday's impressive rally today and now looks to close the day below the 106 mark. As of writing, the pair was down 0.73% on the day at 105.94.
The positive impact of the Trump administration's decision to delay additional tariffs on some Chinese imports on the market sentiment faded away today amid revived concerns over a global economic slowdown. Both retail sales and industrial production data from China fell short of market expectations and Destatis reported a 0.1% contraction in Germany economy in the second quarter.
Risk-aversion dominates markets on Wednesday
The flight-to-safety forced the 10-year US Treasury bond yield to fall sharply and caused an inversion with the 2-year T-bond yield curve for the first time since 2007. Although the yield slump seems to have stalled in the last hours, the 10-year T-bond yield remains on track to close the day with a loss of more than 5%. Stock markets reacted negatively to this development, which is seen as a sign of an upcoming recession, and all three main indexes of Wall Street are down around 2.5% on the day.
The traditional safe-haven JPY capitalized on the risk-off flows and gathered strength against its rivals. In fact, the EUR/JPY pair is now down 1.05% on the day at 118.
On the other hand, the US Dollar Index gained traction despite the sharp fall witnessed in the T-bond yields as the Greenback posted strong gains versus the euro and other risk-sensitive currencies. At the moment, the US Dollar Index is at its highest level since August 5 at 98, limiting the pair's losses for the time being.
During the Asian trading hours on Thursday, industrial production from Japan will be looked upon for fresh impetus but the market's risk perception is likely to continue to drive the pair's action.
Technical levels to consider
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.
Recommended content
Editors’ Picks
AUD/USD stands firm above 0.6500 with markets bracing for Aussie PPI, US inflation
The Aussie Dollar begins Friday’s Asian session on the right foot against the Greenback after posting gains of 0.33% on Thursday. The AUD/USD advance was sponsored by a United States report showing the economy is growing below estimates while inflation picked up. The pair traded at 0.6518.
EUR/USD mired near 1.0730 after choppy Thursday market session
EUR/USD whipsawed somewhat on Thursday, and the pair is heading into Friday's early session near 1.0730 after a back-and-forth session and complicated US data that vexed rate cut hopes.
Gold soars as US economic woes and inflation fears grip investors
Gold prices advanced modestly during Thursday’s North American session, gaining more than 0.5% following the release of crucial economic data from the United States. GDP figures for the first quarter of 2024 missed estimates, increasing speculation that the US Fed could lower borrowing costs.
Ethereum could remain inside key range as Consensys sues SEC over ETH security status
Ethereum appears to have returned to its consolidating move on Thursday, canceling rally expectations. This comes after Consensys filed a lawsuit against the US SEC and insider sources informing Reuters of the unlikelihood of a spot ETH ETF approval in May.
Bank of Japan expected to keep interest rates on hold after landmark hike
The Bank of Japan is set to leave its short-term rate target unchanged in the range between 0% and 0.1% on Friday, following the conclusion of its two-day monetary policy review meeting for April. The BoJ will announce its decision on Friday at around 3:00 GMT.