USD/JPY advances to session highs above 107.50 as US-China trade talks kick off

• 10-year United States (US) Treasury bond yield rises on Thursday.
• Annual core inflation in the US came in at 2.4% in September.
• US Dollar Index consolidates daily losses below the 99 mark.

The USD/JPY pair extended its daily rally in the early trading hours of the American session and rose to 107.65. As of writing, the pair was trading at 107.63, adding 0.15% on a daily basis.

Market sentiment recovers on trade optimism

Reports of China buying record volumes of pork from the United States just when high-level US-China trade negotiations started in Washington seems to be providing a boost to the market sentiment and weighing on safe-haven assets such as the JPY. The 10-year US Treasury bond yield, which was flat on the day an hour ago, turned north on this headline and was last up 1% on the day.

Additionally, Chinese Vice Premier Liu He said that China was willing to reach an agreement on matters that both sides care about to prevent friction from further escalation of the trade dispute.

Meanwhile, the data published by the US Bureau of Labor Statistics (BLS) on Thursday revealed that the annual core inflation in the US stayed unchanged at 2.4% in September as expected and failed to help the Greenback find demand. As of writing, the US Dollar Index was down 0.3% on the day at 98.80, keeping the pair’s upside capped for the time being.

Headlines coming out of the US-China trade talks are likely to drive the pair’s action in the second half of the day.

Technical levels to watch for