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Jul 26 - 05:55 PM

USD/JPY - Steady On Competing Haven Bids, Fed Next For Key Yield Spreads

By Randolph Donney  —  Jul 26 - 02:00 PM

  • USD/JPY traded a tight 136.265-845 range on EBS Tuesday

  • Prices by the highs toward the close as Tsy yields rebound

  • The 21-DMA at the 136.845 high watched as an on-close pivot point

  • Close above eyes 10-DMA at 137.63 last; below keeps 135.44 Fibo in play

  • Intraday rebound in Tsy yields came despite weak U.S. data

  • Yield rise partly off technical support and 5-yr auction concession

  • Also squaring up of longs ahead of Wednesday Fed meeting

  • Another 75bp rate hike is expected, but hiking pace afterward is the issue

  • USD/JPY slowed by 2-yr Tsy-JGB yld spreads still well below June peak

  • Faster Fed hikes also forcing bigger yield curve inversions, recession risk

  • BOJ remains the odd man out with no rate hike plans yet nL1N2Z602Z

  • Main mover was EUR/JPY's 1% fall on euro zone nat gas supply fears

For more click on FXBUZ

Refinitiv IFR Research/Market Commentary


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