MUFG’s Michael Wan notes that softer US data have pushed US 10-year Treasury yields lower and led Fed fund futures to fully price a June rate cut. Wan highlights that this repricing has been most visible in USD/JPY, which slipped below 155, while broader Dollar performance and risk sentiment have shown a more mixed pattern ahead of US Non-Farm Payrolls.

Yield drop drives Dollar-Yen adjustment

"US 10-year Treasury yields fell to around 4.15% while the Fed Fund futures priced in more US rate cuts, with the next cut now fully priced in for the June meeting, and coming ahead of non-farm payrolls numbers out later today. From an FX perspective, the clearest impact was on USD/JPY with the pair falling below the 155 level, while trends in the Dollar and risk sentiment was mixed."

"Driving this was a weaker than expected US retail sales print in December, with no growth for the month relative to consensus expectations for a 0.4% mom rise. This comes ahead of the holiday season, and was even before the impact of an extreme cold winter snap in January showed up in the numbers."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)