The lower demand at the five-year auction may continue in auctions in the coming weeks. This will lead investors to adopt a wait-and-see attitude for the time being.
Although his comments helped the market shift back to widespread interest rate differentials and buy back the dollar, the US unit is not likely to maintain its upsurge much longer.
There has been quite strong resistance around 118.20 yen and as the dollar failed to clear that line, it faced selling pressure.
Unless the market can get a firm perception that the US Fed is ending its interest rate hike cycle, the ongoing weakness of the yen may not come to an end.
The dollar's gains today were capped around the recent peak level of 119.39 yen, because this level is also a key resistance level on charts.
The yen and Asian currencies will appreciate. China week has finally begun. It will be a major focus.
Recent rises in yields of Japanese government bonds, combined with this emerging uncertainty over prospects for US interest rates, are expected to weigh on the US currency against the yen in the near term.
As the European Central Bank is turning more hawkish on its rate outlook, capital inflows into euro-denominated assets are expected to grow stronger.
While the US Federal Reserve Board is exploring ways to exit from the interest rate-hiking cycle, investors are gaining strong confidence in the strength of Japan's economic fundamentals.
On the other hand, it is now believed that the Bank of Japan will hold interest rates, in effect, at zero for a prolonged period because of strong political pressure.
The market is more inclined to the perception that US interest rates will rise further.
The scale of victory was a surprise and that had a positive impact on Japanese stocks. There will be a bigger pull to buy Japanese assets over foreign bonds and stocks.
We are seeing dark clouds on the horizon because of slowing housing markets. The inverted yield curve could be a sign of a slowdown in the economy. Treasuries yields are unlikely to rise.
Yields will have a bias to rise as concern about an inflation bulge is reignited. A rate increase in March is almost a done deal and there's a chance for another move in May.
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