What’s next? – USDJPY 25.04.18

The dollar was trading 0.33 percent higher vs the Japanese yen at 109.17 as of 08:30 GMT on Wednesday, with the dollar taking a central role in the pair’s dynamic in relation to US T yields.

The 10-year US treasury yield reached 3 percent, a level not seen since the beginnings of 2014. However, rates rebounded and moved back below the psychological level.

The US dollar index, which gauges the greenback against six major competitors, was trading 0.33 percent higher at 90.84 by the time of this writing.

Higher bond yields can be interpreted as a vote of confidence in the economy. Usually, rising bond yields are accompanied by falling gold prices as demand for safe-havens decreases.

Analysts pointed out bond yields are reacting on expectations for further monetary policy normalization measures, particularly interest rate hikes scheduled later this year.

Gold gains were capped by an upbeat geopolitical context as positive developments were made over the US-China trade conflict. President Donald Trump emphasized that “China’s very serious, and we’re very serious,” adding that Treasury Secretary Steven Mnuchin will be part of delegation travelling to China. “We’ve got a very good chance at making a deal.”

On the data front, the Conference Board said consumer confidence for April came in at 128.7, surpassing expectations for 126.0 and a previous reading of 127.0. New home sales increased 4 percent in March to an annualized rate of 694,000 units. Also above analysts’ forecasts.

No relevant economic data is due for the day. Market players will keep an eye on bond yields, which could be affected by geopolitics and safe-haven demand.

FortFS