USD/JPY climbs to 108.30 supported by rising US T-bond yields
- 10-year US T-bond yield gains more than 1% on Thursday.
- Annual core CPI in June rises to 2.1% in the US.
- US Dollar Index steadies near 97 following Thursday's sharp fall.
The USD/JPY pair dropped below the 108 mark earlier in the day amid the broad-based USD weakness but didn't have a difficult time staging a rebound in the second half of the day. As of writing, the pair was trading at 108.30, still down 0.15% on the day.
The monthly data published by the U.S. Bureau of Labor Statistics today showed that inflation, as measured by the core Consumer Price Index (CPI), ticked up to 2.1% in June to come in higher than the market expectation of 2%. Supported by the CPI reading, the US Dollar Index gained traction and erased a portion of the fall that it recorded following FOMC Chairman Powell's cautious remarks yesterday.
Additionally, the 10-year US Treasury bond yield turned north in the second half of the day and rose more than 1% to provide an additional lift to the positively correlated USD/JPY pair. Finally, major equity indexes in the U.S. started the day in the positive territory to confirm the risk-on environment, which allows investors to pull away from safe-havens.
The trade balance data from China on Friday could impact the pair's action during the Asian trading hours if it were to cause a change in the market sentiment. Later in the day, the U.S. economic docket will feature the Producer Price Index (PPI) data.
Technical levels to watch for