USD/JPY cracks the 1.40 barrier as yields push higher


Could USD/JPY be in store for another look at the top?

I don’t think the market is as worried about +6% Fed funds as it was in October but there’s a good chance that the terminal rate stays above 5% for longer than previously thought. The Bank of Japan transition has also proven (so far) to be a non-event.

We’re seeing multiple USD breakouts today, including against NZD — which is at the opposite end of the yield spectrum from Japan. That highlights the possibility of USD-specific buying. However mixed into all of that is the debt ceiling fiasco and the flows around that.

What still makes me optimistic about USD/JPY is that most signs point to ongoing resilience in US growth, even relative to other developed markets. The 2-year yield has also cracked above the 61.8% retracement and USD/JPY tracks that closely.

Articles You May Like

GBPUSD finds support buyers near trend line. Can the sellers remain in control?
Job openings slide to 8.7 million in October, well below estimate, to lowest level since March 2021
BBVA migrates crypto custody service to Ripple-owned Metaco’s Harmonize
Canadian Dollar Rises on Jobs Data, Dollar Soft, Euro Worse
Yen Dominates with Strong Rally, USD/JPY Enters Bearish Trend Reversal