USD/JPY rebounds modestly from lows, trades below mid-108s ahead of US CPI data

The USD/JPY pair's recovery attempts remained shallow this amid a lack of fundamental drivers that could have fueled a more decisive upsurge. With the  |  12/06/2019 13:06
  • 10-year US T-bond yield's recovery comes to an end on Wednesday.
  • Wall Street looks to open the day in the negative territory.
  • Coming up: Inflation report from the U.S.

The USD/JPY pair's recovery attempts remained shallow this amid a lack of fundamental drivers that could have fueled a more decisive upsurge. With the market sentiment turning negative on Wednesday, the pair, once again, turned south and fell to 108.20 area before going into a consolidation phase ahead of the inflation data from the U.S. As of writing, the pair was trading at 108.34, losing 0.17% on the day.

The US Treasury bond yields, which posted sharp gains on Monday, closed the day virtually unchanged on Tuesday and came under a bearish pressure today to confirm the dismal market mood. While the 10-year reference is losing 0.8% on the day, the S&P 500 Futures is erasing 0.3% to suggest that Wall Street will start the day in the negative territory. If we see the risk-aversion continue to dominate the markets in the second half of the day, the JPY could outperform its rivals. 

In the early NA session, the U.S. Bureau of Labor Statistics will release its inflation report, which is expected to show the CPI staying unchanged at 2.1% on a yearly basis in May. Soft inflation data could ramp up the probability of the Fed start cutting rates as early as July and cause the greenback to suffer heavy losses.

Previewing the data, "The softer monthly increase is largely the result of the normalization in energy prices, which were a major driver to the upside in recent months. We anticipate food prices to remain largely subdued in May, but flag an upside risk,” TD Securities analysts said.

Key technical levels

 

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