USD/JPY reaches eight-week highs as yield gap widens the most since 2011

US dollar climbed to its highest point in eight weeks against the Japanese yen on Tuesday, as the gap between yields on Japanese and US 30-year bonds increased the most since 2011, after most recent economic data, released out of the United States, implied signs of stabilization in the country.

USD/JPY touched a session high at 99.73 at 7:20 GMT, also the pairs highest point since September 13th, after which consolidation followed at 99.70, rising 0.55% for the day. Support was likely to be found at current session low, 99.11, while resistance was to be encountered at September 13th high, 99.97.

Japanese yen weakened against most of its major peers, as demand for haven assets was dimmed after the MSCI Asia Pacific Index of shares climbed 0.5%, marking a second-day-in-a-row advance.

The difference between 30-year bonds in the United States and Japan rose to 2.26%, or the largest gap since July 2011.

In Japan, the index, gauging activity in the tertiary industry decreased 0.2% in September compared to a month ago, after in August it rose 0.6%, a revision down from a 0.7% gain previously. Experts had anticipated that the index will demonstrate a 0.2% advance in September.

Additionally, according to a survey of 6 720 households in Japan, the gauge of consumer confidence slowed down to a reading of 41.2 in October from 45.4 in September.

Meanwhile, gains, which the greenback registered against the yen, may appear to be limited, before Janet Yellen faces a confirmation hearing on November 14th in order to take over the position of Chairwoman of the Federal Reserve Bank, as market players were estimating if the worlds largest economy is sufficiently resilient, so that the central bank may begin paring back its stimulus. “Yellen is seen as very dovish and cautious about reducing monetary stimulus,” said Kengo Suzuki, the chief currency strategist in Tokyo at Mizuho Securities Co., cited by Bloomberg. “Dovish comments from Yellen would have some dollar-selling effects.”

Since Thursday last week the US dollar has been continuously supported by the strong economic reports, that came out from the United States. On Friday the Bureau of Labor Statistics said that employers in the country unexpectedly added more job positions than projected in October. Non-farm payrolls increased by 204 000 in October, well above the expected 120 000 new jobs and above the revised up number of 163 000 jobs, added in the previous month.

On Thursday another report revealed that US economy expanded at a steeper than expected rate during the third quarter of the year. The Gross Domestic Product rose at an annualized rate of 2.8% in Q3, following the 2.5% expansion in Q2, which marked the best quarterly performance this year.

Elsewhere, the yen was lower against the euro, with EUR/JPY cross advancing 0.36% on a daily basis to trade at 133.44 at 8:38 GMT. GBP/JPY pair was gaining 0.21% to trade at 158.91 at 8:41 GMT.