USD/JPY struggles to break out of tight daily range, sits comfortably above 108.50

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  • Wall Street sees mixed market action on Tuesday.
  • 10-year US Treasury bond yield clings to modest daily gains.
  • Fed’s Harker does not see a case for a rate cut.

After finding interim resistance near the 109 mark, the USD/JPY pair lost its traction and erased a large portion of its daily gains as the trading action remains subdued before the FOMC publishes the minutes of its June meeting on Wednesday. As of writing, the pair was up 0.06% on the day at 108.78.

Following Friday’s upbeat employment data from the U.S., the greenback gathered strength against its major rivals as the probability of an aggressive 50 basis points rate cut in July weakened alongside receding hopes of multiple rate cuts in the remainder of the year.

This development also allowed the Treasury bond yields to stage a decisive rebound and provided additional support to the pair. Since dropping to its lowest level since November 2016 last Thursday, the 10-year T-bond yield rose nearly 7%. On the other hand, major equity indexes started the day in the negative territory but the Nasdaq Composite turned green in the last hour, pointing to a neutral market sentiment, which doesn’t provide a directional clue to the pair. 

The only data from the U.S. today showed that JOLTS Job Openings in May fell to 7.323 million from 7.372 million in April but was largely ignore by the market participants. 

Meanwhile, in an interview with the Wall Street Journal, Philadelphia Fed President Harker said that he did not see a case for an interest rate cut but acknowledged that slowing global growth and uncertainty over trade policy have created “clear risks to that outlook.”

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