Yen Outperforms, Despite Further US Yield Rise

Yen was the second best performer in the G10 space through Thursday, rising just over 0.50%. USD/JPY peaked near 144.00 late in the Asia Pac session, and spent much of the rest of the session retracing, before finding support ahead of 142.00. We closed in NY near 142.50/55, which is where we currently track.

• Despite the pull back, the technical backdrop remains constructive for the pair. Moving average studies are in a bull mode condition highlighting current positive market sentiment. On the downside, initial support to watch lies at 141.33, the 20-day EMA. On the upside, resistance is seen at 144.20, the July 7 high.
• Japan yields finished a touch below session highs yesterday, with the BoJ stepping in again to curb the yield ascent. The 10-Year swap rate is above 0.80%. Still, US-JP 10-yr swap spread is threatening to consolidate back above +300bps, as US yield moves at the back end continue to outpace Japan developments.
• USD/JPY looks a little low relative to these developments, although the divergence isn't large from an historical standpoint.
• Weaker equity sentiment in the EU/US indices may have also helped yen sentiment at the margins on Thursday.
• The local data calendar is empty today.