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  • 10-year US Treasury bond yield gains more than 2% on Friday.
  • US Dollar Index remains on track to finish week above 98.
  • Participants ignore mixed housing data from US, eyes on UoM Consumer Sentiment  report.

The USD/JPY pair touched a daily high of 106.50 earlier in the day but struggled to stretch higher. Nevertheless, the pair continues to trade in the positive territory on the daily chart as the rising US Treasury bond yields make it difficult for the JPY to find demand. As of writing, the pair was up 0.22% on the day at 106.35.

No signs of progress in US-China trade dispute

After slumping to its lowest level since September 2016 at 1.475%, the yield on the 10-year US Treasury bond stages a recovery today and was last up 2.1% on the day at 1.559%. However, the lack of headlines suggesting forward progress in the US-China trade talks shows that the rebound in T-bond yields is technical and is unlikely to gather further momentum unless supported by fundamental developments.

Although White House economic adviser today told CNN that the US and China were currently holding talks on trade, South China Morning Post reported that China was reluctant to place soybean orders despite US President Donald Trump’s demands to do so.  

In the meantime, today’s data from the US today showed that housing starts in July declined 4% but building permits increased by an impressive 8.4% to offset any potential negative impact on the currency. After posting modest gains in the previous three days, the US Dollar Index pushed higher earlier in the day and is now up 0.15% on the day at 98.30, looking to close the week in the positive territory.

Later in the day, the University of Michigan will release its advanced Consumer Sentiment report for August. Furthermore, investors will be paying close attention to the performance of Wall Street’s main indexes to see if risk-on flows continue to dominate the market ahead of the weekend.  

Technical levels to watch for