USDJPY treads water around 139.50, ignores firmer yields, BOJ talks over easy-money policy

• USDJPY struggles to consolidate the biggest weekly loss since October 2008, sidelined of late.
• BOJ officials defend easy money policies despite showing readiness to act.
• US 10-year Treasury yields snap three-day downtrend, two-year bond coupons extend previous day’s rebound.
• US Dollar cheers firmer Treasury yields, sour sentiment to pare weekly loss.

USDJPY remains sidelined around 139.40 despite the latest pullback from the intraday high during early Thursday morning in Europe. In doing so, the Japanese Yen pair portrays the market’s inaction, as well as mixed comments from the Bank of Japan (BOJ) policymakers.

Earlier in the day, BOJ Governor Haruhiko Kuroda mentioned, “(It is) Important to continue monetary easing to support the economy.” On the same line, Senior BOJ Executive Director Shinichi Uchida stated that it is too early to discuss an exit from monetary stimulus. However, BOJ Deputy Governor Hiroshi Nakaso mentioned that the central banks must remove emergency support measures once financial crises are over to avoid causing a moral hazard in the market.

On the other hand, the US 10-year Treasury yields print the first daily gains in four around 3.71% while the two-year bond coupon rise for the second consecutive day to 4.37% by the press time.

It’s worth noting that the recently firmer US data, namely the Producer Price Index (PPI) and Retail Sales for October raised doubts about the US Federal Reserve’s (Fed) next moves and underpin the US Dollar’s recovery moves. That said, US Dollar Index (DXY) snaps a two-day downtrend as it prints mild gains around 106.50 by the press time.

Amid these plays, S&P 500 Futures and equities in the Asia-Pacific zone grind lower of late and propel the USDJPY prices due to the US Dollar’s safe-haven demand.

Furthermore, China’s covid woes and geopolitical concerns surrounding Russia joined a wider trade deficit in Japan during October to also favors the USDJPY buyers of late.

Looking forward, USDJPY traders should pay attention to the risk catalysts amid a lack of data ahead of the US Weekly Jobless Claims and Philadelphia Fed Manufacturing Survey for November. Should the numbers arrive firmer, the US Dollar recovery is likely to persist.

Technical analysis

Despite the latest inaction, the USDJPY pair’s sustained trading below an upward-sloping resistance line from March, previous support around 141.45, keeps the bears hopeful of renewing the monthly low, currently around 137.65.