USD/JPY holds gains near 110.20 on stronger USD
- USD/JPY remains muted on Thursday in the initial Asain trading session.
- A sharp decline in US 10-year benchmark Treasury yields capped the gains for USD/JPY.
- US Dollar Index keeps its steady pace near 93.00 on hawkish Fed’s members.
After testing the high of 110.44 in the previous session, USD/JPY trades marginally lower in the Asia session on Thursday. The pair confides in a very narrow trade band of less than 10-pips movement.
At the time of writing, USD/JPY is trading at 110.25, down 0.01% for the day.
The move was primarily sponsored by the sharp decline in the US Treasury yields, which fell from 1.37% to 1.33% with more than 3% losses. The concern about the outlook for economic growth spooked the market with the Dow Jones Industrial Average falling more than 200 points.
The US Dollar Index (DXY), which measures the performance of the greenback against its six major rivals stands tall at 92.70, diverging its path from the bond yields. This, in turn, built pressure on the safe-haven yen.
Meanwhile, St. Louis Fed Bank President James Bullard shrugged off the concerns over labor market recovery and reaffirmed his stance on tapering to start this year. Furthermore, New York Fed President remained confident about the pace of economic recovery and talked about reducing the pace of bond purchases this year. The hawkish comments fueled the demand for the greenback.
In addition to that, the number of job openings in the US came at 10.934 million in July, much above the market expectations of 10.0 million whereas the IBD/TIPP Economic Optimism Index plunged 48.5 in September. The mixed data capped the upside for USD/JPY.
On the other hand, the Japanese yen holds ground benefiting from its safe-haven appeal. Further, the higher GDP readings boosted the sentiment. The economy grew by 0.5% QoQ in Q2, after a revised 1.1% fall in Q1.
As for now, investors are waiting for the US Initial Jobless Claims and Fed’s officials speech to gauge the market sentiment.
USD/JPY additional levels