The Japanese Yen has sustained its depreciation against the U.S. Dollar after yesterday’s U.S. treasury yield rally – as higher bond yields generally lend itself to a stronger greenback. Today shows a marginal slowing in yields which could see a slight pullback amongst USD crosses.
Later today, Fed Chair Powell will make an address outlining the risks associated with the recent spike in long-term borrowing costs. Higher U.S. borrowing costs are greatly amplified (negatively) by safe-haven assets such as the Yen (see chart below). Powell’s response to rising treasury yields will be interesting to see as markets await further transparency.