USD/JPY steadies near 109 following two-day rally
- 10-year US Treasury bond yield is posting modest losses on Wednesday.
- BoJ's Kuroda says they need to continue with large-scale easing.
- US Dollar Index stays calm below the 98 handle.
The USD/JPY pair gained nearly 100 pips in the first two days of the week and reached a fresh five-day high of 109.25 but struggled to preserve its bullish momentum on Wednesday. As of writing, the pair was moving sideways near the 109 handle, losing 0.15% on a daily basis.
Risk-on flows ease on Wednesday
The sharp upsurge witnessed in the 10-year US Treasury bond yield triggered by hopes of the United States and China soon finalizing the phase-one of the trade deal earlier this week fueled the positively-correlated pair's rally on Monday and Tuesday. After rising around 8% in that two-day span, the 10-year T-bond yield is now down around 0.75%, allowing the pair to stage a correction.
Earlier in the day, Bank of Japan's Governor Haruhiko Kuroda noted that they need to continue with "large-scale easing." Moreover, "Most members said it was appropriate to persistently continue with easing," the BoJ said in the minutes of its September policy meeting, possibly keeping the JPY's gains limited against its peers.
On the other hand, the US Dollar Index, which advanced to a two-week high near the 98 mark on Tuesday boosted by the upbeat data, is staying relatively calm on Wednesday amid a lack of significant fundamental drivers. At the time of press, the index was down 0.1% on the day at 97.80.
During the American session, the Unit Labour Costs and Nonfarm Productivity data from the US will be looked upon for fresh impetus.
Technical levels to watch for
Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
