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USD/JPY higher on strong demand for 10-year notes; Commodities diverge – MarketPulse


  • Thursday’s inflation report to seal the deal for a Fed hold in September
  • Treasury sells 10-year notes with strong demand as yields drop
  • China deflation raises prospects of more stimulus

USD/JPY rose after a strong auction signaled that Wall Street is very confident that inflation will continue to fall. It looks like investors will gladly be eating all the extra issuance that comes from the Treasury. After tomorrow, we will see if traders are nervous that inflation is proving to be a little sticky or overwhelming confident that inflation will fall to the Fed’s 2% target by year end.  

Price action is tentatively breaking out above key trendline resistance that has been in place since the end of June.  Further upside for dollar yen could target the 145.00 level, which would be accompanied by some jawboning from Japan.  To the downside, 141.50 remains key support.

Risk appetite should remain healthy as deflation in China is also providing limited optimism that the more stimulus is coming and that disinflation pressures will steadily ease across Europe and North America.  Markets should see some lackluster moves until tomorrow’s US inflation report.  

Commodities Diverge


Crude prices are rallying on expectations China will be forced to deliver more stimulus and after the EIA report showed an impressive rebound with diesel and gasoline demand.  The US is also refilling the Strategic Petroleum Reserve (SPR), so that should provide some underlying support. The SPR rose by almost 1 million barrels and should be poised to receive another 2 million before the end of summer.

The EIA report was not all bullish as US production rose to the highest levels since March 2020 and crude exports fell to the weakest levels in four weeks. The oil prices should remain supported going forward as OPEC+ remains committed to keeping the market tight and as the Russia – Ukraine war could threaten Russian crude exports.


Gold prices are weakening ahead of a pivotal inflation report that is expected to solidify a Fed hold in September.  Gold’s weakness occurs as Treasury yields edge lower, while European yields rise.  With a softer dollar, gold shouldn’t be weakening this much ahead of a key inflation report. Some big traders must be profit-taking over fears Wall Street will not react kindly to a slight rise with the headline annual inflation reading.

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Ed Moya

Ed Moya

Senior Market Analyst, The Americas at OANDA

With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.

Ed Moya

Ed Moya


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