USD/JPY to reach the 110.40 highs as US yields are on the rise again – ING

US 10-year Treasury yields hold up around 1.33%. USD/JPY fell below the 110.00 gravity line last week but the pair is set to recoup this level as US yields march higher again, economists at ING report.

10-year US yields to re-test the 1.37% monthly highs

“Any improvements on the US-China relationship should continue to hit JPY harder than USD, and drive USD/JPY back up.”

“Our rates team sees the balance of risks as skewed for a continuation of the trend higher in 10-year US yields into the week ahead, with a chance to re-test the 1.37% monthly highs.”

“We think USD/JPY could move back to the 110.40 highs in the week ahead.” 

“Data out of Japan this week (PPI, Machine orders, trade numbers) should have very little impact on the yen.”