USD/JPY edges higher toward 108.70 as 10-year T-bond yield extends rally

• 10-year US Treasury bond yield adds 2.5% on Thursday.
• Hopes of US delaying December tariff hike boosts sentiment.
• US Dollar Index rebounds to 98 in American session.

The USD/JPY pair rose modestly in the last hour boosted by the improving market sentiment and was last seen trading at 108.65, adding 0.05% on a daily basis.

Earlier in the day, Chinese news outlet South China Morning Post (SCMP) said that the White House could delay the tariff hike on Chinese imports in December and caused safe-haven assets to lose interest. The 10-year US Treasury bond yield, which closed the previous three days in the negative territory, staged a decisive recovery and was last seen up 2.55% on the day at 1.785%.

“There is still some modicum of optimism that a watered-down deal can be reached before new US tariffs go into effect on December 15, but even if the deal proves elusive, sources say it is likely they will be at least postponed,” the SCMP reported.

Upbeat data helps USD gather strength

On the other hand, the US Dollar Index capitalized on Thursday’s inspiring macroeconomic data releases and advanced to the 98 area to further support the pair’s rebound.

Existing Home Sales in the US rose 1.5% in October following Septembers decline of 2.5% and the Philly Fed Manufacturing Index improved to 10.4 in November to ease concerns over the poor performance of the manufacturing sector in the US.

In the early trading hours of the Asian session on Friday, Consumer Price Index data from Japan will be looked upon for fresh catalysts. Later in the day, Markit Manufacturing and Services Purchasing Managers’ Index (PMI) data from the US will be featured in the economic docket.

Technical levels to watch for