The US Dollar inched higher versus the Japanese Yen and struck a 4-month peak after a rise in yields of US Treasury instruments suggested an improving outlook for the US economy. In early trade in Asia, the yield for US 10-year Treasuries hit 3.128%, a 7-year high. This week, the benchmark yields climbed nearly 15 basis points and is now on track to record the largest weekly rise in three months. Analysts say that the yield rise is indicative about growing optimism that the US economy will continue to improve coupled with expectations of a rate hike from the Federal Reserve Bank at least twice this year.
As reported at 11:12 am (JST) in Tokyo, the USD/JPY was trading at 110.899 Yen, a gain of 0.12%; the pair earlier hit a peak of 110.992 Yen, while the low is at 110.770 Yen. EUR/USD was trading at $1.18, a gain of 0.08% and off the session peak of $1.18080 while the low is at $1.17893.
Japanese Inflation for April Disappoints
In Japan, the Statistics Bureau earlier reported that National CPI fell to 0.6% in April (year-over-year), below economists’ predictions of a decline to 0.7% from 1.1% in the previous reporting session. Core CPI which strips out food and energy as volatile components hit forecasts at 0.4% (year-over-year), down from 0.5%. The numbers remain far short of the Bank of Japan’s target inflation rate of 2% despite pro-inflation policies. Whether the BoJ will continue to adjust monetary policy with more rate cuts to chase what some analysts call an elusive target remains to be seen.