USD/JPY sticks to daily lows, eyes 109.50

• USD/JPY slides below 110 on the back of dollar weakness.
• Market sentiment is downbeat, benefiting the safe-haven status of the Japanese yen vs the greenback.
• On Thursday, the US Jobless Claims and the Retail Sales will be released.

After posting a three-day high during the Asian session, the USD/JPY turned around and is trading around 109.59, down 0.33% on the day, on broad US dollar weakness. The greenback has been dragged by a fall of 3.46% in the US 10-year benchmark rate.

The market sentiment remains in risk-off mode, so the market dumps everything with the “risk” word attached,  benefiting the Japanese yen. The US 10-year Treasury yield, which positively correlates with the USD/JPY pair, is down in the session four basis points, currently at 1.284%. Meanwhile, the US dollar index is down 0.10%, trading at 92.51.

US inflation figures prompted a dollar sell-off

In the US, the Core Consumer Price Index in August rose 4% against 4.3% foreseen by economists. It is the slowest pace in six months, insinuating that inflation has potentially peaked. This reaffirms the Fed’s “transitory” thesis. Nevertheless, despite waning inflation, supply chain disruptions and semiconductor chip shortages remain in play and could exert inflationary pressures. 

That said, if the "transitory" theory of price rises takes hold, the US dollar could continue its downtrend. Retail Sales figures for August and consumer confidence data for September are due this week.

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