USDJPY: Guided by US 10-year yields - BBH

Analysts at BBH suggest that the US 10-year yield continues to appear to be a powerful contemporaneous indicator of the dollar-yen exchange rate. 

Key Quotes

“The correlation between the two, on a percentage change basis appears to be near a record high. The US 10-year yield fell 13 bp since the post-US jobs data high near 2.40%.  It has fallen through its 20-day moving average for the first time in over a month.  The dollar recorded its lows against the yen for the year on September 8, the same day the 10-year yield bottomed just above 2.0%.”

“If this marks the end of this leg up in the dollar, then we should look at some retracement objectives.  The first is near JPY111.10, and a break would bring the next retracement into view.  JPY110.40 finds it The daily technical indicators are consistent with additional dollar losses, and the five-day moving average is set to cross below the 20-day average for the first time in a month.  However, here too we remain impressed that the technical indicators on the weekly charts remain dollar-friendly.”