- USD/JPY struggled to preserve/capitalize on its modest intraday gains on Friday.
- A subdued USD price action turned out to be a key factor that capped the upside.
- Signs of stability in the equity markets, elevated US bond yields extended support.
The USD/JPY pair held on to its modest intraday gains heading into the European session, albeit lacked follow-through and was last seen trading around the 114.00 mark.
The pair built on the overnight bounce from one-week lows and gained some traction during the early part of the trading action on Friday. Reports that China Evergrande made funds available for a bond coupon to a trustee account helped ease concerns about a credit crunch in China's real estate sector. This, in turn, undermined the safe-haven Japanese yen and acted as a tailwind for the USD/JPY pair.
On the other hand, the US dollar, so far, has struggled to capitalize on the previous day's goodish rebound from three-week lows. This was seen as a key factor that failed to provide any additional boost to the USD/JPY pair and capped the early uptick near the 114.20 area. The downside, however, remains cushioned amid a further widening of the US-Japanese government bond yield differential.
In fact, the yield on the benchmark 10-year US government bond rose to 1.683%, or the highest level since May 13 on Thursday amid expectations for an early policy tightening by the Fed. The speculations were reinforced by comments from Fed Governor Christopher Waller, saying that the US central bank may have to act faster if inflation continues to run high through the remainder of this year.
Conversely, the yield on the 10-year Japanese government bond remained near zero due to the Bank of Japan's yield curve control policy. This warrants some caution for aggressive bearish traders and before positioning for any extension of the recent pullback from near four-year tops touched earlier this week.
Market participants now look forward to the release of flash US PMIs for a fresh impetus later during the early North American session. This, along with the US bond yields, will influence the USD price dynamics. Traders will further take cues from the broader market risk sentiment for some short-term opportunities around the USD/JPY pair.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD holds on to intraday gains after upbeat US data
EUR/USD remains in positive ground on Friday, as profit-taking hit the US Dollar ahead of the weekend. Still, Powell's hawkish shift and upbeat United States data keeps the Greenback on the bullish path.
GBP/USD pressured near weekly lows
GBP/USD failed to retain UK data-inspired gains and trades near its weekly low of 1.2629 heading into the weekend. The US Dollar resumes its advance after correcting extreme overbought conditions against major rivals.
Gold stabilizes after bouncing off 100-day moving average
Gold trades little changed on Friday, holding steady in the $2,560s after making a slight recovery from the two-month lows reached on the previous day. A stronger US Dollar continues to put pressure on Gold since it is mainly priced and traded in the US currency.
Bitcoin to 100k or pullback to 78k?
Bitcoin and Ethereum showed a modest recovery on Friday following Thursday's downturn, yet momentum indicators suggest continuing the decline as signs of bull exhaustion emerge. Ripple is approaching a key resistance level, with a potential rejection likely leading to a decline ahead.
Week ahead: Preliminary November PMIs to catch the market’s attention
With the dust from the US elections slowly settling down, the week is about to reach its end and we have a look at what next week’s calendar has in store for the markets. On the monetary front, a number of policymakers from various central banks are scheduled to speak.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.