USD/JPY rises above 144.50 as US yields stretch higher

  • USD/JPY trades in positive territory above 144.50 on Wednesday.
  • 10-year US Treasury bond yield is up more than 2% on the day.
  • Focus shifts to ISM’s Services PMI survey for September.

USD/JPY continued to edge higher in the early American session on Wednesday and was last seen rising 0.35% on the day at 144.55.

10-year US yield is back above 3.7%

Although the risk-averse market environment allows the JPY to stay resilient against its rivals, rising US Treasury bond yields help USD/JPY preserve its bullish bias.

Following the sharp decline witnessed on Monday, the benchmark 10-year US Treasury bond yield is up more than 2% on the day slightly above 3.7%. The data from the US showed that the ADP Employment Change arrived at +208,000 in September, surpassing the market expectation of 200,000, providing a boost to the greenback and US yields.

According to the CME Group FedWatch Tool, markets are currently pricing in a 66.5% probability of one more 75 basis points Fed rate hike in November, compared to 50% on Tuesday. 

Later in the session, the ISM will release the Services PMI report for September. Market participants will pay close attention to the Prices Paid and Employment components of the survey.

Meanwhile, major equity indexes in the US look to open significantly lower after having registered impressive gains on Monday and Tuesday. Escalating geopolitical tensions force investors to stay away from risk-sensitive assets mid-week.

Technical levels to watch for

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