USD/JPY inter-market: Today’s fresh selling independent of the intrinsics

USD/JPY’s rise from 109.50 levels witnessed last Friday extended until Monday’s early European trading, before finding a balance area between 110.90-111.35 zone, where the VX (risk barometer) almost flattened.

Subsequently, the prices broke sharply to the downside during Tuesday NY session, with the downfall extended to almost two-week lows reached below 109 handle this Thursday. Tuesday’s down move was triggered by a steep decline in the Japanese 10-year bond yields, while those on the US benchmark also dipped; however, the slope was much steeper of the Japanese ones. At the same time VX traded quite choppy, failing to provide any direction to USD/JPY.

However, a fresh sell-off seen in the major today is not justified by intrinsics, as the prices were sold into “buy the rumour sell the fact“ strategy adopted by markets, after Japanese PM Abe‘s decided to delay sales tax hike by 2.5 years.

The prices failed to derive support from a sharp reversal in the Japanese yields, while the 30-Day Fed Fund futures prices have almost steadied, with the CME Group FedWatch tool based on it, now showing 21% chances of a June Fed rate hike versus 22.5% seen a day before.