USD/JPY rises to around ¥106.70 as the US Dollar recovers

Analysis General

Published: 2/15/2018 12:54:00 PM

The USD/JPY is trading around ¥106.70, a sharp move from the lows of around ¥106.20 seen earlier in the US session. The pair is reflecting a recovery in the US dollar that is also seen against the Euro and the Pound. 

The greenback is advancing together with stabilization in US 10-Year Treasury Bonds Yields. The global benchmark reached a low of 2.879% and is now recovering towards the 2.900% level. The correlation between bond yields and the USD/JPY is not always evident. 

Early in the American morning, the US released data that mostly exceeded expectations. The Producer Price Index showed an annual increase of 2.7% YoY in January. Core PPI rose by 2.2% YoY, above 2.1% that had been projected. Weekly Jobless Claims stood at 230K as expected while Industrial Production fell by 0.1%, below an increase of 0.2% that was on the cards. The US Dollar did not initially respond to the figures. 

Housing Starts, Building Permits, and the preliminary publication of the Consumer Sentiment by the University of Michigan are all lined up on the economic calendar on Friday. 

Shares on Wall Street opened higher and remain in positive territory in the US afternoon. The market calm is supportive of selling the Japanese Yen, a safe haven currency that sees flows in times of trouble.

On the upside, the round level of ¥107.00 was the high point of the day. A break above this level opens the door to ¥108.07 (Feb. 9 low), and then ¥109.30 (Feb. 7 high). 

On the downside, today's 15-month low of ¥106.17 is the next level to watch. Further below, the round level of ¥105.00 has high psychological importance and may trigger a form of intervention from the Bank of Japan. 

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