USD/JPY: non directional on mixed outlooks after oil rockets 9%

Currently, USD/JPY is trading at 114.47, up 0.06% on the day, having posted a daily high at 114.84 and low at 114.29.

USD/JPY was bid into the Tokyo open, scoring the aforementioned high before meeting strong supply almost from the get go in Tokyo down to current spot of 114.42 at time of writing.

The theme is all about yields with today's rally of 9% in oil and rates jumping on inflationary concerns, propelling the greenback forward on expectations of a Fed hike in December and a more aggressive stance from the Fed on the back of inflationary pressures under Trump's presidency and expected fiscal spending in 2017.

Oil intermarket: DXY to remain a positive correlation for a while?

"US 10-year inflation expectations, as priced in the inflation-indexed bond market, have risen half a percent in 3 months, and got a 7bp lift overnight," explained analysts at ANZ, adding, "Higher inflation expectations are of course exactly what central banks have been trying to bring about for years. But one does wonder whether amongst the central bankers' high-fives there may be some furrowed brows.

Investors and financial markets have become very used to nominal interest rates being at exceptionally low levels over the past 8 years - indeed, many traders have experienced no other paradigm. Bond markets have already taken a lot of pain as rates rocketed in November - US 10-year yields have risen 52bp.OPEC say and OPEC do are quite different things of course. But for now, things are all pointing in one direction. And higher interest rates are bad for asset prices, all else equal. "

USD/JPY levels

Current price is 114.48, with resistance ahead at 114.55 (Yesterday's High), 114.57 (Weekly Classic R1), 114.84 (Daily High), 115.04 (Daily Classic R3) and 116.07 (Weekly Classic R2). Next support to the downside can be found at 114.42 (Monthly High), 114.42 (Weekly High), 114.42 (Daily Open), 114.29 (Daily Low) and 114.19 (Daily Classic R2).