USD/JPY sits in bullish territory near 121 the figure

• USD/JPY hangs in the 121 area and at fresh highs.
• The Fed is driving sentiment with global yields on the rise.

USD/JPY is up on the day by some 0.3% at 121.07 and has travelled between a low of 120.75 and 121.41 so far in Asia. The pair has made a fresh high since January 2016 on growing expectations that the Fed will deliver a sharp response to the inflationary problem.

''It is a challenging time for fixed income markets as the combination of hawkish central banks, high commodity prices, ongoing supply chain issues and rising inflationary pressures are all putting strong upward pressure on bond yields. The lift in bond yields is effectively tightening monetary conditions,'' analysts at ANZ Bank said earlier.

Meanwhile, another round of hawkish Fed commentary kept global yields on the rise. However, Asia's rally extending to Europe and the US.

Risk-sensitive currencies outperformed which weighed on the yen. Hawkish FOMC member James Bullard said that the Fed needs to aggressively curb inflation risks and should not await an easing of geopolitical tensions, analysts at Westpac noted, explaining further: ''He wants to see an early reduction of the balance sheet, and a swift move to slightly restrictive policy levels. San Francisco Fed president Mary Daly said high inflation warrants having interest rates “marching up to neutral” and the Fed considering whether to make policy restrictive.''