USDJPY traces firmer yields to print mild gains around 139.50, focus on G20, Japan GDP

  • USDJPY snaps a 2-day downtrend at the lowest levels of late August
  • Yields prints corrective pullback at monthly low, but Fed pivot test bond sellers are being discussed.
  • BOJ’s defense of easy-money policy, hopes of economic rebound highlight this week’s Japan Q3 GDP.
  • G20 updates can be used to direct actions, but US Retail Sales is important for the near-term.

USDJPY is able to regain its lost ground at 2.5-months low, consolidating recent losses with 0.70% intraday gain around 139.50 before markets in Tokyo open Monday.

This makes the yen-dollar pair more bearish than the recent calmness among bond traders after a long weekend. The USDJPY bears may also be affected by the anxiety surrounding a meeting between Joe Biden, the US President, and Xi Jinping, the Chinese Prime Minister. This will take place at the G20 gathering in Bali.

Also likely to have triggered the USDJPY rebound could be the comments from Fed Governor Christopher Waller who tried to defend the bulls while saying, “Rates will not fall until there is ‘clear, strong evidence’ inflation is falling.”

While portraying the mood, the S&P 500 Futures retreat from a one-month high, down 0.30% intraday near 3,990, whereas the US 10-year Treasury yields rise six basis points (bps) to 3.89%, printing the first daily gains in four.

It’s worth noting, however, that the chatters surrounding the US Federal Reserve’s (Fed) pivot, mainly backed by the last week’s US Consumer Price Index (CPI) for October and the November month’s first readings of the University of Michigan Consumer Confidence Index.

Additionally, talks of the Japanese Finance Ministry’s intervention to defend the Yen (JPY) also drowned the USDJPY prices.

Alternatively, the Bank of Japan (BOJ) policymakers’ defense of easy money and challenge to the market’s optimism from Russia and China appear to keep the bears on their toes.

Market players will find updates from the Group of 20 Nations meeting in Bali interesting, given the light calendar and because Joe Biden (US President) and Xi Jinping (China’s Prime Minister) will be there. However, major attention will be given to the first readings of Japan’s third quarter (Q3) Gross Domestic Product (GDP) and the US Retail Sales for October amid hopes of easing divergence between the Fed and the BOJ.

Analyse technique

Despite the fact that the USDJPY bears are facing a near oversold RSI (14), sellers remain hopeful of testing an upwardly-sloping support level from late May (around 137.00 by press time).


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