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USD/JPY renews weekly low under 114.00 on downbeat yields, BOJ Minutes

  • USD/JPY takes offers near 113.85 during the three-day downtrend.
  • BOJ Minutes cites inflation fears, one member suggested Fed rate hike could cause yen rise.
  • Market sentiment sours amid pre-Fed cautious after Yellen’s comments, Japan inflation came in mixed for December.
  • Yields, equities remain pressured amid a light calendar day.

USD/JPY remains on the back foot for the third consecutive day, down 0.30% intraday around 113.85 as Tokyo opens for Friday. The yen pair portrays the market’s risk aversion while tracking downbeat Treasury yields and equities.

Fears of the US Federal Reserve’s (Fed) hawkish appearance in the next week’s monetary policy meeting seem to weigh on the USD/JPY prices the most. On the same line are the recently downbeat signals from the Bank of Japan (BOJ) monetary policy meeting minutes as well as mixed inflation data from Japan.

Expectations of the Fed’s signal to rate hike grew stronger after US Treasury Secretary Janet Yellen said in a CNBC interview, “Inflation rose by more than most economists, including me, expected and of course, it’s our responsibility with the Fed to address that. And we will.”

Japan’s National Consumer Price Index (CPI) for December rose past 0.6% prior to 0.8% YoY while National CPI ex-Fresh Food reprinted 0.5% YoY level versus 0.6% expected.

It’s worth noting that indecision over the US-China ties also weighed the market’s sentiment and the USD/JPY prices. That said, the South China Morning Post (SCMP) signaled that China’s Yang Jiechi and US national security adviser Jake Sullivan are up for a crunch meeting but no date was indicated.

Against this backdrop, the US 10-year Treasury yields posted a second consecutive daily loss, down four basis points to 1.79% at the latest, whereas the S&P 500 Future dropped 0.30% intraday by the press time.

That said, the USD/JPY prices cheered mixed data as an excuse to curtain bullish bets on the greenback and the Treasury yields. The US Jobless Claims jumped to the highest since late October and the Philadelphia Fed Manufacturing Survey details also improved for January.

Looking forward, a lack of major data/events can restrict short-term USD/JPY moves but the bearish bias remains intact amid downbeat Treasury yields and pre-Fed fears.

Technical analysis

A clear downside break of a three-month-old rising trend line, near 114.15 by the press time, directs USD/JPY prices towards the 100-DMA level surrounding 113.25.