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  • United States Treasury bond yields turn south on Thursday.
  • US Dollar Index clings to modest gains above the 0.99 mark.
  • The US economy is expected to expand by 2% in the second quarter.

Positive market sentiment and the broad-based USD strength allowed the USD/JPY pair to retrace the majority of its weekly losses on Wednesday. After closing the day at 107.70, however, the pair struggled to stretch higher on Thursday as investors remain on the sidelines ahead of the gross domestic product (GDP) data from the United States (USD). As of writing, the pair was down 0.09% on the day at 107.67.

Trade war headlines improve market sentiment

Earlier on Thursday, Chinese Commerce Ministry Spokesman Gao told reporters that they were preparing for making progress in next month’s high-level trade negotiations in Washington and revived hopes over the trade dispute coming to an end before escalating any further.

Although the upbeat market sentiment seems to be providing a boost to global equity indexes, the 10-year US Treasury bond yield, which rose more than 5% on Wednesday, seems to be staging a technical correction and was last down 1% on the day.  

In the early trading hours of the American session, the US Bureau of Economic Analysis will release the final estimate of the second-quarter GDP growth. Markets expect the US economy to expand by 2% on a yearly basis and a higher-than-expected reading could cause the pair to gather bullish momentum. Moreover, investors will be paying close attention to Wall Street’s main indexes’ performance in the second half of the day.

On Friday, Tokyo Consumer Price Index (CPI) data from Japan will be looked upon fresh impetus.  

Technical levels to watch for