Major Reversal in JPY Turns Eyes to USD, NZD & CHF

WikiFX News (19 Aug) - USD/JPY retreated in the face of the U.S. Treasury yields reverse. In addition, NZD/JPY declined on the forecast of local banks that New Zealand is considering negative interest rates, while only CHF/JPY may grow in the chaos.

USD/JPY has given up all the advances gained last week as a currency pair closely related to U.S. yields. But the 10-year Treasury yields have much further to fall considering most of last weeks profits have been taken out. As such, eyes are turned to the short-term support of 105.30, in which a breach below will throw the 105.00 barrier into the spotlight.

Local banks have altered their calls for the RBNZ (Reserve Bank of New Zealand) to go negative as the RBNZ has intended to lower bond yields. According to ANZ banks latest forecast, the official cash rate (OCR) will turn to be negative by April 2021. Consequently, NZD/JPY sank to 69.00 again in the day and maintained the seasonal weak pattern in August.

CHF/JPY has attracted attention in recent sessions, which may provide JPY bulls with more upside space for the Japanese Yen, especially when the Swiss National Bank is still actively curbing CHF appreciation.

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(Chart: The relationship between USD/JYP and U.S. 10-year Treasury yields)