Yen Gains After MOF Rejects Buyback Speculation
The yen edged higher against the dollar after Japan’s finance ministry said the country has no plans to buy back government bonds in July and that speculation about such a move is unrealistic. The currency is now weaker, and Japanese bonds are up. USD/JPY rose 0.2% to 145.16
The yen earlier fell on news that Chinese and U.S. officials had come out of two days of talks in London aimed at cooling trade tensions
Japan’s finance ministry dismissed speculation that it might buy back bonds as early as next month after a debt market rout that sent yields on ultra-long securities to record highs
Key Tech: The near-term outlook for the dollar-yen is bullish, especially after the weekly DeMark Buy Countdown and as the pair looks set to test the cloud top; a close above the 55-DMA could trigger another short squeeze and challenge the prevailing bearish dynamics in the longer term
“The bond market has been recovering only on speculation that issuance or buyback reductions will be implemented,” said Yasunari Ueno, chief market economist at Mizuho Securities. “If this fails to materialize, a disappointing selloff is inevitable.”
A federal appeals court ruled that Trump can keep his global tariffs in place for now, in a victory for one of his signature economic policies. The move extended a previous short-lived reprieve for the administration as it challenged a lower court ruling last month that blocked the tariffs.
JGB futures rose 21 ticks to 139.35, while the benchmark 10-year yield fell 2 bps to 1.46%
“JGB traders will revert to the yield curve steepening strategy that was common before last month’s horrific 20-year auction,” wrote Bloomberg MLIV’s Mark Cranfield. “But there is enough wiggle room for aggressive traders to steepen the curve with the BOJ meeting next week, which will be followed by a meeting with bond dealers a few days later.”
Source: Bloomberg
