Japanese Yen, USD/JPY, 2-Yr Treasury Public sale, US GDP – Asia Pacific Market Open:

• Japanese Yen gained because the 2-year Treasury yield weakened
• Native bond public sale confirmed demand was highest since 2020
• USD/JPY stays centered decrease after October trendline held

Asia-Pacific Market Briefing – Japanese Yen Good points as Treasury Yields Fall

The Japanese Yen gained in opposition to the US Greenback on Wednesday, capitalizing on broad weak spot within the Dollar. However small latest modifications from the Financial institution of Japan in the direction of coverage normalization, the BoJ stays probably the most dovish developed central financial institution. As such, the Yen usually finds itself being delicate to exterior developments, significantly from the USA.

USD/JPY’s drop coincided with the 2-year Treasury yield falling about 2 p.c on Wednesday. The most recent 2-year Treasury public sale revealed that the bid-to-cover ratio jumped to 2.94 from 2.71. It is a gauge of demand. It was the very best since April 2020. It appears contributors could be desperate to lock in a excessive charge in anticipation of a future decline in yields. Such an final result could possibly be attributable to a recession.

The public sale additionally occurred earlier than key US financial information comes out later immediately. At 13:30 GMT, the primary estimate of fourth-quarter GDP will cross the wires. The US economic system is seen rising 2.6% q/q, slower from 3.2% in Q3. A softer final result might additional enhance beds of Federal Reserve charge cuts later this yr. A subsequent drop in US bond yields would thus seemingly push USD/JPY decrease.

Specializing in Thursday’s Asia-Pacific buying and selling session, the financial docket is pretty quiet. As such, the main focus for merchants will seemingly be on danger urge for food. Wednesday’s Wall Road buying and selling session noticed the Dow Jones, S&P 500 and Nasdaq 100 end largely flat. As such, this will likely depart markets consolidating till key US GDP information comes out later.

Japanese Yen Technical Evaluation

On the each day chart, USD/JPY seems to be turning decrease after costs as soon as once more examined the important thing falling trendline from October. Additional losses would place the give attention to the 100% Fibonacci extension degree at 127.98. Preserve an in depth eye on RSI. Optimistic divergence might emerge, persevering with to point out that draw back momentum is fading. The latter can at instances carry bearish underpinnings.

USD/JPY Every day Chart

Chart Created in TradingView

— Written by Daniel Dubrovsky, Senior Strategist for DailyFX.com

To contact Daniel, comply with him on Twitter:@ddubrovskyFX