USD/JPY tracks firmer yields to poke 136.00 during full markets, focus on Fed Minutes, US NFP

• USD/JPY picks up bids to extend the week-start rebound amid cautious optimism.
• US Treasury bonds begin the week’s trading on a negative side ahead of the key data/events.
• Sino-American trade headlines, chatters surrounding BOJ keeps the buyers hopeful.
• Risk catalysts, US Factory Orders data for May are also important for fresh impulse.

USD/JPY holds onto the week-start recovery around 136.00 as Tokyo opens on Tuesday. The yen pair’s latest gains could be linked to the market’s mildly positive sentiment and firmer Treasury bond yields.

The US bond markets regain traction after the US holidays paused the Treasury yield moves on Monday. It’s worth noting that the benchmark 10-year Treasury bond yields keep Monday’s U-turn from a one-month low at around 2.92%, up three basis points (bps) from Friday’s closing.

In doing so, the bond yields appear to have tracked German bunds. That said, the yields on the 10-year German Bund rose over 10 basis points to 1.32% at the latest.

On a different page, the mildly positive risk profile could be linked to the US holiday on Monday, as well as the chatters surrounding the US discussion on removing the Trump-era tariffs on China.

Elsewhere, Japanese policymakers’ refrain from rate hikes emphasizes the Fed versus Bank of Japan (BOJ) divide and the resulted monetary policy divergence, which in turn propel the US Treasury yields, as well as the USD/JPY prices.

Looking forward, US Factory Orders for May, expected 0.5% versus 0.3%, could entertain USD/JPY traders but major attention should be given to the risk catalysts, as well as the pre-NFP sentiment, not to forget the full markets’ reaction to the recently firmer bond yields.

Technical analysis

The 21-DMA restricts short-term USD/JPY downside around 135.00, which in turn propels the yen pair towards the recently flashed multi-year high near 137.00.