USD/JPY: Mildly bid above 114.00 as US T-bond yields rise

• USD/JPY licks its wounds after the biggest daily losses.
• Yields rebound, S&P 500 Futures drop after Biden’s speech.
• Virus woes join geopolitical and trade fears to weigh on bonds, Fed, China concerns are important too.
• Japan trade deficit eased in December, second-tier US data eyed.

USD/JPY picks up bids to 114.38, up 0.10% intraday on fresh upside momentum during Thursday’s Asian session.

The yen pair recently cheered the US Treasury yields rebound while paying a little heed to Japan trade numbers. That said, the risk barometer pair dropped the most in a week the previous day as market sentiment improved and the US bond coupons eased from the multi-day top.

Japan’s Merchandise Trade Balance Total eased to ¥-582.4B versus ¥-784.1B forecast and ¥-955.6B revised prior in December. Details suggest that the Imports eased to 41.1% versus 42.8% expected whereas the Exports rose past 16.0% forecast to 17.5% during the stated month.

Elsewhere, the US 10-year Treasury yields rose 4.5 basis points (bps) to 1.87% whereas the S&P 500 Futures drop 0.15% intraday to portray the risk-off mood at the latest.

Market sentiment worsened after US President Joe Biden renewed hopes of faster monetary policy normalization by the Federal Reserve (Fed). Also weighing on the risk appetite and favoring the yields were concerns relating to Russia and China.

US President Joe Biden’s press conference was the latest blow to the market’s mood as he touched various risk-sensitive issues ranging from Russia to China, not forget Fed. US President Biden said, “China is not meeting its purchase commitments,” but also mentioned Chief Trade negotiator Katherine Tai’s efforts to placate Sino-American trade tussles.

Biden also praised Fed Chair Jerome Powell’s push to recalibrate the support also raised concerns over faster rate hikes and balance sheet normalization, which in turn exerted additional downside pressure on the USD/JPY prices.

Additionally, quasi emergency in Tokyo and 12 prefectures joins chatters over Tokyo’s inflating of virus alerts to the highest, favored by Yomiuri, also propelled the USD/JPY moves.

Looking forward, US Jobless Claims, Philadelphia Fed Manufacturing Survey for January and Existing Home Sales for December will entertain USD/JPY traders afterward.

Technical analysis

A clear bounce off 50-DMA level near 114.30 directs USD/JPY towards another attempt to cross the 20-DMA hurdle of 115.00.