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USD/JPY Tests Late Nov 2023 Highs As US Yield Recovery Continues

JPY

Yen remained on the back foot post the Asia close on Wednesday. We got to highs of 148.52, but sit slightly lower in early Thursday dealings, last near 148.20. Yen fell nearly 0.70% for Wednesday's session, the worst performer in the G10 space.

  • Wednesday highs were very close to end Nov highs from last year, a break abvoe 148.50 will see a move above 149.00 tagreted.
  • Better US data, particularly in terms of retail sales weighed on the front-end of the Treasury curve, which continues to filter through to a weaker JPY, which remains the most sensitive to diverging yield differentials.
  • The UST 2yr yield rose nearly 14bps to 4.36%, while the 10yr gained nearly 5bps to 4.10%. The 10yr US-JP yield differential is back close to +350bps.
  • Further weakness in global equity sentiment did little to aid yen performance, with higher UST yields dominating.
  • The local data calendar today has weekly investment flow data, along with core machine orders and then later on IP/capacity utilization prints. These outcomes are for Nov.
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