USD/JPY Near 128,000, the bias is still negative;

Early on Thursday, the USD/JPY maintains its lower levels at 128.00 as it reverses the previous day’s rise amidst weaker Treasury bond yields and a weaker US dollar. In doing so, the Yen pair pays little attention to the worries raised by the US recession worries and the disappointing foreign trade figures from Japan.

In December, Japan’s merchandise trade balance total improved to -1,448.5 billion yen from prior readings of -2,029 billion yen and 1,652.8 billion yen.

The specifics, however, point to a decrease in exports and imports from the prior month. After doing further research, Reuters notes that shipments to China decreased for the first time in seven months.

 The majority of hawkish remarks made by Federal Reserve (Fed) policymakers may also be having an impact on the USD/JPY exchange rate.

James Bullard, president of the St. Louis Federal Reserve, stated that US interest rates must increase even more in order to prevent inflationary pressures from growing.

In a similar vein, Loretta Mester, president of the Federal Reserve Bank of Cleveland, lauded the Fed’s efforts to control inflation.

 Furthermore, Kansas City Fed President Esther George stated that in order to achieve price stability, “returning to 2% inflation” is necessary. Lorie Logan, president of the Dallas Federal Reserve, recently backed a slower rate rising pace but also suggested a higher stopping point.

Given the dearth of significant data or events, USD/JPY traders should pay particular attention to bond market movements, which emphasize yields, for unambiguous indications of the direction to take.