- USD/JPY edges higher on Tuesday following the previous day’s gains.
- Higher US Treasury yields underpin the demand for the US dollar.
- Hawkish Fed members, reduced contagion Evergrande risk and general risk-on mood aids USD.
USD/JPY refreshes daily highs above 111.00 on Tuesday extending the overnight gains. The pair composed of nearly 40-pips movement in the previous session fueled by the upside in the greenback. At the time of writing USD/JPY, is trading at 110.99, up 0.01% for the day.
The US benchmark 10-year Treasury yields rose to 1.47% on Monday on the hawkish Fed’s members. New York Fed President John Williams warned on the debt ceiling issue, further he said that it was reasonable to expect tapering could be done by the middle of the next year. Atlanta Fed President Raphael Bostic discarded long worrisome inflation concerns.
In addition, the US Fed Reserve Chair Jerome Powell considered inflation concerns, hiring difficulties, and other drivers of price as transitory ahead of his testimony Tuesday for the Senate Banking Committee.
The US Dollar Index (DXY), which tracks the performance of the greenback against six major currencies, peaked above 93.40 following the remarks from Fed’s member and upbeat US Durable Goods Orders data. The readings came higher by 1.8% in August, much above the market forecast of 0.7% increase. Investors digested the Evergrande debt crisis and regulatory crackdown in China.
As for now, traders are waiting for US Goods Trade Balance and are digesting the Bank of Japan (BOJ) Monetary Policy Meeting Minutes to gauge market sentiment.