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    USD/JPY intermarket: Record low yields, more pressure to the Bank of Japan? Matías Salord

    USD/JPY  is about to end the week flat, around the same level it closed seven days ago. The US dollar and the yen were the worst performers weakened by an improvement in risk appetite following the shock that took place with the UK referendum results. In London, the FTSE 100 had the best week since 2011 while US stocks rose on average 3.10%. Crude oil also gained rising almost 3%.Usually, risk appetite favors the upside in the USD/JPY. The pair rose from Monday until Thursday, and on Friday it turned to the downsides, falling from 103.25 to 102.50. The decline happened at the same time when the yield on the Japanese and US bonds reached new record lows. The US 10-yr  bottomed at 1.385% before rebounding modestly to the  upside, while the Japan 10-year yield dropped to -0.255%.USD/JPY has been more influence by US yields rather than risk appetite during the last months. So the pair could continue to be under pressure if the Federal Reserve as expected leaves rates unchanged during the current year adding more pressure to Japanese authorities if they still want to avoid an excessive appreciation of the yen.The next meeting of the Bank of Japan will be in July 28/29. The current price level of the yen adds pressure to officials to act strongly announcing more easing in order to curb yen’s strength. No measures could push USD/JPY below 100.00, if by that time still remains on top.  



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