The USD/JPY pair is trading sideways in the Asian session today. The yen pair is in consolidating phase after a heavy loss yesterday by dropping the most since August. While it has to be noted that the pair has broke March 2017 highs before activation of the stated fall on Wednesday.
The receding inflation expectation seem to underpin the bearish trend of USD/JPY. The receding inflation expectations could be linked to the recent retreat in the US Treasury yields and the US Dollar Index (DXY). The White House optimism regarding the US supply chain seems to create the receding inflation fears.
Elsewhere, US inflation expectations, as measured by the 10-year breakeven inflation rate as per the St. Louis Federal Reserve (FRED) data, dropped for the second consecutive day by the end of Wednesday’s North American session.
Market sentiments remain challenged amid the Fed policymakers remaining divided on the inflation woes and the rate hike concerns.
Chicago Fed’s Chief Executive Officer Charles L. Evans recently mentioned that “It will take until the middle of next year to complete the Fed’s wind-down of its bond-buying program, even as the central bank remains mindful of inflation.”
U. S Treasury secretary Janet Yellen said that “U. S’s three-decade inflation high was the result of the Covid-19, and it can be controlled only if the pandemic is controlled.” She said “if U. S manages to control the pandemic soon, consumer prices could return to normal levels sometime in the second half of next year.”
On the other hand, Japan’s unlock and aim for stronger ties with the US to stop China from Taiwan favors the Yen. Talks that the Asian nation has been able to achieve the highest inoculation rate in the Group of Seven (G7) without any mandates also seem to be positive for the Yen.
USD/JPY 4 Hour Chart:
Latest
Popular
Trending
Archives
Search
Top Tags