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Yen Edges Higher as Investors Await U.S. GDP Data: Inside Japan

(Bloomberg) — Yen advances against the dollar as decline in Treasury yields undermines investor appetite for the greenback ahead of the release of 2Q U.S. GDP data later Friday.

  • Japan’s govt bond yields broadly higher as BOJ keeps volume of debt purchases unchanged at its regular operations

YEN

  • USD/JPY falls 0.3% to 110.98; range 110.88-111.33
  • “A wait-and-see mood prevailed in the market,” says Ryuta Taketomi, client manager of marketing trading office at Resona Bank’s treasury division. “The dollar is under downward pressure, but lost momentum as bids emerged sporadically below 111 yen”
    • Says USD may advance if GDP proves underlying economy is strong, although summer doldrums could be hitting the market especially after the FOMC this week
    • USD/JPY likely to hover around 111 yen in the near term
  • U.S. 10-year Treasury yield down 1bp at 2.30%

BONDS

  • JGB futures falls 0.02 to 150.19
  • 10-year bond yield little changed at 0.07%; 5-year yield rises 0.5bp to -0.06%; 20-year yield little changed at 0.585%
  • “Bond yields have risen in overseas market, but JGBs haven’t been sold too heavily,” says Tadashi Matsukawa, head of Japanese fixed income at PineBridge Investments
    • JGBs may gain support from U.S. Treasury market as investors tend to refrain from taking exposure to risk assets in August and shift money into bonds for safety, he says
  • BOJ kept the amount of JGB purchases unchanged at regular operations, buying 470.7b yen of 5-to-10 year bonds, 280.2b yen of 1-to-3 year and 330.8b yen of 3-to-5 year bonds
  • READ: Japanese inflation defies the tightest jobs market in decades

–With assistance from Shigeki Nozawa. To contact the reporter on this story: Chikafumi Hodo in Tokyo at chodo@bloomberg.net To contact the editors responsible for this story: Tan Hwee Ann at hatan@bloomberg.net Shikhar Balwani

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