USD – Treasury Yields and the US Dollar Rise as the USD/JPY Approaches 150.

Oct 21, 2022
VOT Research Desk

Market Insights, Considerations & Analytics

Today’s increase in the US dollar was aided by increased Treasury yields.

Although USD/JPY is trading over 150, intervention risks seem to be increasing.

Rates must be raised, according to the Fed.

Markets are taking stock ahead of the weekend, so far today, the US dollar is generally stronger.

In the wake of Prime Minister Liz Truss’s resignation, Sterling has underperformed the majors the most, which is not surprising. The GBP/USD pair is still below 1.1200.

At this point, there is no indication of any official selling of the USD/JPY pair. Shunichi Suzuki, the Japanese finance minister, mused about confronting speculators while seemingly ignoring the extremely loose monetary policy that is being implemented by the Bank of Japan (BoJ) in accordance with directives from the Ministry of Finance (MoF).

The headline CPI for Japan came in at 3.0% year-over-year, which was slightly higher than the 2.9% forecast. The core figure was also 3.0% higher than the previous year, which was in line with estimates.

Through the Asian session, equity markets have been relatively calm, with Australia’s ASX 200 losing almost one percent as the main mover. Futures suggest that the North American cash session will get off to a slow start.

After soaring once more in the US session, Treasury yields are up a couple of basis points across the curve in Asian trade. Today, the benchmark 10-year bond reached 4.27%, its highest level since 2008.

Gold is slightly weaker and crude oil is gaining a little on the day, but both are headed for another negative week. Commodities are mixed.

Canada will also receive retail sales numbers after the UK. Williams and Evans from the Fed are expected to make remarks that will also be broadcast live later today.

TECHNICAL PERSPECTIVE OF THE (DXY)

The DXY index measures the value of the US dollar against the following currencies: EUR (57.6%), JPY (13.6%), GBP (11.9%), CAD (9.1%), SEK (4.2%), and CHF (3.6%)

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After reaching a 20-year high at the end of last month, the DXY index is still in an ascending trend channel, which may provide resistance.

The price has crossed back above the 10-day and 21-day simple moving averages (SMAs) in recent sessions, which may indicate that bullish near-term momentum is returning.

The price has remained above the 55-, 100-, and 260-day SMAs over the medium and long terms, which may indicate that the underlying bullish momentum may continue.

Support and resistance could come from the most recent range of 111.77–113.92.

Indicators – Daily

GBP/USD

USD/JPY