Whatâ€™s next? â€“ USDJPY 05.07.17
The dollar/yen was 0.09 percent lower at 113.18 as of 05:00 GMT, with market participants opting for a wait and see positioning ahead of key publications later in the day.
Factory orders will be published at 14:00 GMT and Fed’s June meeting minutes at 18:00 GMT.
On Tuesday, the pair showed little changes as American stocks were closed due to the Independence Day holiday, which hit activity volumes.
The pair reached its highest point since mid May on Monday, although it capped gains later in the session. However, it showed enough strength to continue its upward extension to 114.367.
The USDJPY edged up following a rise in Treasury bond yields on the back of better than expected manufacturing activity in the United States.
The Institute for Supply Management reported an increase of its manufacturing PMI index for June to 57.8, leaving it above an initially forecasted 55.2 and a previous 54.9.
Upbeat data also boosted expectations for a rate hike later this year, which according to CME Group’s FedWatch tool are currently standing at a 50.3 percent probability for December.
The differential between US Japanese bond yields was another factor pushing the pair upwards. Both countries are still on two different sides when it comes to monetary policy.
While the Federal Reserve insists that normalization is the way to go, the Bank of Japan prefers all economic indicators to match with expectations before moving forward.
The yield on the 10 year Treasury Note moved to 2.35 percent, while the 30 year Treasury Bond yield increased to 2.865 percent.