As market mood conditions remain mixed, the USD/JPY is barely at a flat level during the day.
US Treasury yields rise, led by the 10-year at 2%.
The USD/JPY bias in is tilted upwards, as USD buyers target 116.00, followed closely by the YTD high.
Update:
The USD/JPY fell during the North American session as tensions escalated between Ukraine and Russia. There were reports that Russia would attack Ukraine the week following. The USD/JPY trades at 115.19 as of the writing.
The USD/JPY fell to 115.80, causing a daily low of 115.00. After that, it stalled at 115.80, before stabilizing at 115.15.
The US Dollar Index is up almost half percent to 95.95. Meanwhile, US Treasuries are retreating from Thursday’s highs due to a safe-haven offer.
According to a PBS NewsHour reporter at 18:30 GMT, the US believes that Russian President Vladimir Putin has made a decision to invade Ukraine. They have already communicated these plans to Russia’s military. Two officials from the Biden administration said that they expected the invasion to start as soon as next week.
The reporter stated that US defense officials anticipated a “horrific and bloody campaign” that would include two days of bombardment, electronic warfare, and invasion with the potential goal of regime change. According to reports, the North Atlantic Council was briefed today on the new information.
According to Reuters Jake Sullivan, US National Security Advisor, stated Friday that a Russian invasion could occur at any moment and could take place during the Beijing Winter Olympics.
Sullivan urged Americans to flee within 24 hours.
End Of Update
After Thursday’s volatile trading session, where the US economy printed a 7.5% inflation rate, it was the highest since 1982, the USD/JPY fell barely during the North American session. The US Treasury yields, led by the 10-year note, rose above the 2% mark while the greenback swung, with the US Dollar Index rising towards 96.00, dropping to daily lows of 95.40s to end 0.25% higher near 95.79. The USD/JPY trades at 115.88, 0.14% down at the time of writing.
James Bullard, President of the St. Louis Federal Reserve, crossed the wires on Thursday. He stated that he supports a 1% rate increase to the Federal Funds Rate by July 1. He said that he did not want to “prejudice” the March meeting by referring to a 50-bps increase.
To maintain control over the Yield curve, the Bank of Japan (BoJ), announced it would purchase unlimited amounts of Japanese Government Bunds (10YG) at 0.25% on February 14, 2019.
Sources cited in Reuters stated that the BOJ tried to discourage players testing the 0.25% line by announcing it days ahead of time and to pre-empt any breach – but not actually needing to buy JGBs.
The US 10-year Treasury yield has regained the 2.03% threshold. This is almost a tailwind to the USD/JPY which saw its losses of 0.11% reduced to 0.08%.
A missing Japan economic docket left USD/JPY traders stranded to US macroeconomic data. The University of Michigan Consumer Sentiment Index dropped to 61.7, its lowest level since October 2011. Inflation expectations for 1-year rose to 5% from 4.9% in January.
USD/JPY Forecasts Technical Outlook
USD/JPY continues to maintain a bullish bias. As USD bulls plan to attack the YTD high of 116.35, the upbreak of a trendline that was one month old accelerated the move towards 116.00. It was broken on Thursday.
The USD/JPY first resistance is 116.0. A breach of this would expose the YTD high of 116.35 and the challenge of a 24-month old downslope trendline of around 117.00. If that ceiling level is broken, it would open the door to a January 2017 swing high of 118.61.
