USD/JPY rebounds toward 107.00 on rising US T-bond yields

• USD/JPY is posting small daily gains near 107.00.
• US Treasury bond yields gained traction after 30-year bond auction.
• US Dollar Index remains on track to close in the negative territory.

The USD/JPY pair dropped toward 106.70 during the early trading hours of the American session but erased its losses in the last hour supported by rising US Treasury bond yields. As of writing, the pair was up 0.08% on a daily basis at 106.98.

US T-bond yields gain traction after 30-year bond auction 

Following the US’ 30-year Treasury bond auction, which set a high yield of 1.406%, US T-bond yield turned north and the yield of the 10-year reference rose to its highest level since late June and was last seen gaining 5.5% at 0.717%. Supported by this development, the US Dollar Index (DXY) pulled away from daily lows and helped USD/JPY stage a modest recovery. Nevertheless, the DXY remains on track to close the second straight day in the negative territory near 93.20.

Meanwhile, Wall Street’s main indexes trade mixed on Thursday with the S&P 500 and the Dow Jones Industrial Average posting small losses and the Nasdaq Composite gaining around 0.5%. 

Earlier in the day, the data published by the US Department of Labor showed that weekly Initial Jobless Claims in the US fell below one million for the first time since March but was largely ignored by the market participants.

On Friday, investors will be paying close attention to the Industrial Production, Retails Sales and the UoM Consumer Sentiment Index data from the US. 

Technical levels to watch for