USD/JPY Remains Depressed on Soft Data and Lower Yields

Apr 4, 2023

The USD/JPY currency pair has declined to 132.20, continuing its retreat from a two-week high. The drop in US Treasury bond yields and softer data, as well as upbeat comments from Japan's Prime Minister Fumio Kishida, may be behind the recent losses. Kishida has pledged more investment to speed up private investment in green transformation bonds to promote domestic decarbonization. Meanwhile, the US 10-year Treasury bond yields have dropped for the past four days to 3.42%, while the two-year counterpart has also declined for two consecutive days to 3.97%. Softer US PMIs and lack of inflation fears from the OPEC+ supply cuts and the resulting oil price run-up have weighed on yields. Furthermore, the downbeat Fed calls have also contributed to the decline in yields and USD/JPY prices. As a result, the USD/JPY may face downward pressure ahead of this week's key US jobs report.