USD/JPY hovers around 115.50 amid sluggish yields, Russia-Ukraine in focus
- USD/JPY retreats from weekly high, renews intraday low of late.
- Tokyo CPI improved in February, Russia’s bombardment eyed.
- Moscow rushed past Chernobyl, Ukraine President said need to talk about ceasefire with Russia.
- Geopolitical updates will determine near-term market moves, US data, Fedspeak can act as additional catalysts.
USD/JPY seesaws around 115.50-60 during Friday’s Asian session, following the biggest daily jump in three weeks.
The yen pair dropped to the lowest since February 03 early on Wednesday before bouncing off the 100-DMA support, currently near 114.40. While Russia’s invasion triggered the initial flight-to-safety, hawkish comments from Fed and upbeat US data seem to have added to the USD’s strength and called back the USD/JPY bulls.
The recovery moves could also be linked to the hopes of a halt in further causalities as the West shows readiness to step in and Russia signals willingness to discuss the “Terms of Ukraine's surrender.”
As per the latest updates, the Ukrainian Envoy to Japan conveyed that the Ukrainian government lost control over Chernobyl nuclear plant. Further, talks that Russia us up for overthrowing Ukraine government and may soon bombard Kyiv also keep USD/JPY traders on their toes.
Talking about data, the second reading of the US Q4 GDP matched 7.0% annualized forecasts but firmer figures of Personal Consumption Expenditure, Chicago Fed National Activity Index and Jobless Claims seemed to have added to the US dollar’s strength.
At home, Tokyo Consumer Price Index (CPI) rose to 1.0% YoY versus 0.6% expected and 0.5% forecast whereas Tokyo CPI ex Food, Energy dropped to -0.6% from -0.7% previous readings and -0.5% forecasts for February.
comments from Atlanta Fed President and FOMC member Raphael Bostic and Richmond Fed President, as well as an FOMC member, Thomas Barkin, seemed to have also favored the USD bulls even as Cleveland Fed President Loretta Mester said that she doesn't think raising interest rates by 50 bps in March is compelling
Amid these plays, Wall Street closed with mild gains after the initial plunge whereas the US 10-year Treasury yields closed more or less at the same level the previous day, after marking a volatile day. However, S&P 500 Futures drop 0.20% and the US Treasury yields remain pressured around 1.96% by the press time.
Moving on, geopolitical updates are the key for USD/JPY, due to its risk-barometer status. Also important will be US Core PCE Inflation data and Durable Goods Orders for January, not to forget the Fedspeak.
Technical analysis
Unless providing a daily close below the 100-DMA, around 114.40 by the press time, USD/JPY bulls remain hopeful to refresh monthly peak, currently near 116.35.