USD/JPY jumps after US inflation data

For the sixth day in a row, the USD/JPY pair has been trading in the green near the 145.00 level. Due to stronger-than-expected US PPI data from July and investor expectations for the Bank of Japan (BoJ) to adopt a more dovish attitude, the dollar is appreciating and the Yen is losing appeal.

With daily advances of more than 1%, the yields on US treasury bonds are rising. As investors lay bets on the Bank of Japan adopting a dovish posture, the Yen stays weak. In July, the headline PPI report showed a 2.4% YoY, which was slightly higher than anticipated.

Gains in US bond yields are being caused by hawkish wagers on the Federal Reserve and are being seen throughout the curve. The 10-year bond yield increased to 4.18%, while the 2-year yield and the 5-year yield are both at 4.90% and 4.31%, respectively.

Although they are still slim for the forthcoming September decision, the chances of a 25 basis point raise at the November meeting increased to about 30%. The emphasis now switches to Japan’s GDP numbers coming out next week.