USD/JPY climbs to 15-day highs near 108.70
- Draghi's neutral tone helps T-bond yields push higher.
- US Dollar Index turns positive on the day in the American session.
- Upbeat Durable Goods Orders from US provide a boost to USD.
Boosted by the rising US Treasury bond yields, the USD/JPY pair extended its daily rally and touched its highest level in two weeks at 108.71. As of writing, the pair was trading at 108.67, gaining 0.45% on a daily basis.
Earlier today, ECB President Draghi refrained from adopting a dovish tone and didn't give the market the rate-cut timing or the introduction of a new QE program that it was hoping for. Draghi's neutral stance helped the shared currency gather strength and caused the EUR/JPY pair to gain more than 100 pips from its daily lows, providing a lift to the USD/JPY pair as well.
Furthermore, Draghi's comments allowed rate-sensitive Treasury bond yields to turn north. With the 10-year US T-bond yield adding more than 1.5%, the positively-correlated USD/JPY pair preserved its bullish momentum.
US Durable Goods Orders rebound sharply in June
On the other hand, ahead of tomorrow's GDP data, the US Census Bureau's Durable Goods Orders came in at +2% on a monthly basis in June following May's 2.3% decline and beat the market expectation for an increase of 0.7% by a wide margin to assist the US Dollar Index retrace its daily losses and turn positive on the day above 97.80. At the moment, the index is up 0.15% on the day at 97.82.
Assessing the data, "Even after backing out aircraft orders, non-defense capital goods rose 1.9% in June—the best monthly increase in over a year and a welcome improvement in an otherwise soft area,” Wells Fargo analysts said.
“A better than expected outturn for shipments of core capital goods signals the expected decline in equipment spending in tomorrow’s GDP report may not be as bad as feared.”
Technical levels to watch for