Following a series of strong US economic indicators, the US dollar has surged along with rising US bond yields. The April US PCE deflator rose to +4.4% year-on-year, surpassing the previous +4.2% reading. The core deflator also increased to +4.7% year-on-year from the previous +4.6%. Both figures exceeded market expectations. Additionally, April’s durable goods orders in the US continued to increase, rising by +1.1% year-on-year, compared to the previous +3.3% reading. This was a stronger result than the expected -1.0%.
In response to these positive results, the yield on the US 10-year Treasury bond sharply rose from around 3.78% to the 3.83% range. USD buying intensified, and USD/JPY quickly surged from around 139.70 to a high of 140.31. EUR/USD declined from the 1.0750 range to the 1.0730 range. With the strengthening of yen selling, EUR/JPY extended its high from around 150.20 to 150.65.
Based on the assessment that there is still significant upside potential for USD/JPY, a buying entry on USD/JPY was made earlier.