USD/JPY climbs to 159.50 amid the stronger USD, bulls turn cautious amid intervention fears

• USD/JPY extends its upside near 159.50 amid the USD demand.
• The US Durable Goods Orders rose by 0.2% m/m vs. -5.6% prior, better than -0.5% expected.
• Traders turn cautious amid the fear of FX intervention by Japanese authorities.

The USD/JPY pair surges to 159.50 during the early Asian session on Thursday. The uptick of the pair is bolstered by higher Treasury yields, upbeat US data, and risk aversion in the market. Meanwhile, the US Dollar Index (DXY) climbs to 106.65, the highest since November. The 10-year Treasury yield settled at 4.60%, its highest level since 2007.

The US Census Bureau revealed on Wednesday that Durable Goods Orders rebounded in August, rising 0.2% m/m from a 5.6% drop in the previous reading, against expectations of a 0.5% m/m fall. Additionally, Durable Goods Orders ex Transportation rose by 0.4% m/m, a better than expected of 0.1% rise. Core capital goods orders rose 0.9% from the previous reading of a 0.4% drop, above the market consensus of 0%. In response to the data, the Greenback gained momentum across the board and weighed on the Japanese Yen (JPY).

Risk-averse sentiment dominated markets as investors weighed higher for longer rates narrative against growth risks from the possibility of an imminent government shutdown in the US. However, market participants will keep an eye on the Federal Reserve (Fed) Chair Jerome Powell’s speech this week. The less hawkish tone might cap the upside of the USD against its rivals.

On the JPY’s front, Japanese Finance Minister Shunichi Suzuki is back on the wires with some verbal intervention. Suzuki said once again that he was watching FX with a sense of urgency. Traders turn cautious to place bullish bets on the USD/JPY pair since the 150.00 mark would be the threshold at which Japanese authorities would take action to address the Japanese Yen's depreciation.

Market players will focus on the US weekly Jobless Claims report, the third revision of Gross Domestic Product (GDP) for the second quarter, and Pending Home Sales data. The attention will shift to the Fed's preferred measure of consumer inflation, the Core Personal Consumption Expenditure (PCE) Price Index, scheduled for release on Friday.