USD/JPY is consolidating in a tight range around 121.45-60 this morning with the lack data releases draining the market of fresh impetus. Fresh buying interest is now said to be emerging from 121.25 down to 121.20 in the wake of today's rally. US bond yields are edging higher to 4.816% after yields hit the highest in three months on Friday, and continues to support the USD/JPY.
The US yield spread over JGBs is holding at 393 bp and the upper end of the recent 365-395 bp range. Of note was the report in the Nikkei on the weekend that only Toyota Motor and Mitsubishi Motor would have seen a profit increase in the last fiscal year if it had not been for the continued weakness in the JPY against the USD and the EUR. The weak JPY was said to have increased automaker profits by Y610 bln during the year. USD/JPY currently trades at 121.53.
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