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US Dollar Unwinds A Modest Dip On FOMC Minutes, USDJPY Eyeing 147 Again

  • US real yields initially drove the bulk of the rally in Treasuries on the FOMC minutes, before breakevens broke lower as 10Y real yields climbed back.
  • That helped see DXY briefly at the day’s lows before retracing a large part of the move, although the moves are lost when looking at the bigger picture in recent weeks as DXY moves back to circa 1.5% below cycle highs seen in days after the Sep 21 FOMC.
  • Similarly, USDJPY fell -0.15% on the minutes but has clawed most of this back, closing in again on 147.00 (currently 146.89) with the pair maintaining a recent bullish tone as it crossed above the previous intervention zone during APAC trade, registering a fresh multi-decade high in the process.
  • Comments earlier from BOJ Governor Kuroda repeated his pledge to continue with his easing policy because the Japanese economy is still recovering from the impact of the Covid-19 pandemic, and inflation is expected to moderate over the following year.

DXY (yellow) and 10Y real yields (white)Source: Bloomberg

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