USD/JPY pauses gain near 111.00 posts mixed US data

  • USD/JPY consolidates the previous day’s gains on Friday.
  • Rebound in US Treasury yields uplifts the demand for the US dollar.
  • Yen gains are suppressed as market sentiment improves after the US Fed bank stress test.

The appreciative move in the US dollar keeps,  USD/JPY higher with steady moves. The pair moves in a narrow trade band with no meaningful traction.

At the time of writing, USD/JPY is trading at 110.86, down 0.01% for the day.

The US Dollar Index( DXY), which measures the performance of the greenback against its six major rivals, stands unchanged at 91.80 with 0.3% gains. The US Treasury yields traded at 1.49% on Friday, above the four month low of 1.36% touched earlier in the week. 

The greenback limits the gain on the mixed US economic data. Durable Goods orders rose 2.3% inMay, below the market expectations at 2.8%. The Weekly Jobless Claims fell less than expected last week. The readings suggest that labor market conditions are improving but at a slower pace.

In another set of data, the US economy grew by 6.4% in Q1 in line with the market consensus. The US goods trade deficit widened to $88.1 billion in May, from $85.7 in the previous month.

Meanwhile, the US large banks clear the Fed’s stress test. The central bank lifted limits on buybacks and dividends, it had put in place as the COVID-19 pandemic hit the economy. 

In addition to that,  US President Joe Biden declared a “deal” on its infrastructure plan after meeting with a bipartisan group of senators. However, there are still some differences between the two sides, which need to be resolved.

On the other hand, the Japanese yen remains pressurized on the improved risk sentiment. The country is struggling with COVID-19 and slower vaccination issues.

The growth differentials in the US and Japan weigh on the prospects of the yen.

As for now, investors are waiting for the US Personal Income and Spending data, PCE Price Index, and Michigan Inflation Expectation. The Tokyo CPI data is also on the traders’ taps to gauge the market sentiment

USD/JPY additional levels

 

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