USD/JPY touches fresh YTD highs near 111.25 as US Treasury yields rebound

• USD/JPY continues to push higher and hits a fresh 15-month high on Thursday.
• Uptick in US Treasury yields push the US dollar to scale higher, ISM data eyed.
• Yen surrendered gains on mixed economic data and COVID-19 resurgence in Asia-pacific.

USD/JPY extended the previous session’s gains and set to record a fresh rally in the past 15 months. The pair opened near the high level on Thursday and confided in a narrow trade band with an upside bias.

At the time of writing, the USD/JPY pair is trading at 111.21, up 0.10% for the day.

The move is primarily sponsored by the appreciation of the US dollar. The greenback stands at 92.40, trading at 12-weeks highs on risk aversion and market volatility.

Investors rushed to the US dollar as the concerns over the spread of the highly contagious Delta variant spooked the market. 

Meanwhile, the US 10-year benchmark yields trade higher at 1.46% with 1.12% gains. The long dated  Treasury yields rose from 1.35% on Wednesday to the intraday high of 1.47%.

On the other hand, the Japanese yen came under pressure after the Japanese Chief Cabinet Secretary Kato said as the economic sentiment is improving, the government will assess the situation to decide whether to go ahead with an additional stimulus package.

The au Jibun Bank Japan Manufacturing PMI (PMI) came at 52.4 in June, compared with the market estimate of 51.5.

The Bank of Japan’s (BOJ) Tanken survey showed that the business sentiment among Japan’s large manufacturers has improved to the highest level in the past 13 years. 

The concerns over rising commodity prices and the emergence of new COVID-19 variants keep downside risk in the economy. These comments from the policymakers impacted yen negativley.

In the economic docket, investors will have the opportunity to react to US Initial Jobless Claim data, Markit Manufacturing Purchasing Managers Index (PMI),  and ISM Manufacturing PMI data.

USD/JPY additional levels