- USD/JPY trades below the highest level in eleven months.
- Traders watch for BoJ’s intervention, which could limit the losses of the Japanese Yen.
- US Treasury yields elevate, providing support to the US Dollar.
USD/JPY hovers around 149.80 during the early European trading session on Tuesday, slightly below its highest level in eleven months. The Bank of Japan (BoJ) continues to maintain its ultra-loose monetary policy framework, as indicated by its recent announcement of an unscheduled bond-purchasing exercise on Monday.
This action is intended to address the rising yields in Japanese government bonds, signaling the central bank's commitment to its accommodative monetary stance.
However, Bank of Japan (BoJ) Governor Kazuo Ueda reiterated the central bank's stance, emphasizing that they will not hesitate to implement additional easing measures if deemed necessary. Ueda clarified that a recent comment regarding a "quiet exit" from monetary easing was misinterpreted.
The US Dollar Index (DXY) has surged to an 11-month high, hovering around 107.10. This strength in the Greenback is attributed to the rise in US Treasury yields. The 10-year US Treasury yield has surpassed its highest level since 2007, standing at 4.68% by the press time, following the avoidance of a partial government shutdown in the United States (US).
Moreover, market caution regarding the interest rates trajectory set by the US Federal Reserve (Fed) is contributing to the positive sentiment for the US Dollar (USD). This caution could lead to increased demand for the US Dollar as a safe-haven currency.
Market participants await the US employment data, with the release of the ADP report on Wednesday and the Nonfarm Payrolls on Friday.
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