US dollar climbs to 10-week high versus yen on positive US GDP data

A better-than-expected economic performance from the United States (US) supported a jump in Treasury yields and a rise in the US dollar to a 10-week high against the Japanese yen on Friday.

The dollar greenback gained to the strongest level against the yen since December 20th, rising around 0.4% to ¥111.80, at 4.15pm Tokyo time. The US dollar had passed the technical resistance of ¥111.30 earlier in the day before continuing its steady ascend.

The US dollar faced some pressures earlier in the day as the euro rallied on bullish expectations of an improving European economy but recovered after the US posted a 2.6% gain in gross domestic product (GDP) for the fourth quarter of last year, beating economists’ expectations of a 2.3% gain.

The benchmark 10-year US treasury yield was at 2.716%, after rising to 2.731% on Thursday, which was the highest since February 6th.

‘The strong response to the US GDP data shows that the market is currently focused on fundamentals, rather than geopolitical factors,’ commented Mr Junichi Ishikawa, senior FX strategist at IG Securities in Tokyo.

Geopolitical tensions: Trump-Kim summit ends with no deal, India and Pakistan tensions

The dollar greenback felt some pressure against the yen on Thursday after the US and North Korean leaders failed to conclude their meeting with any progress on a denuclearization deal.

Tensions between India and Pakistan this week also caused some investors to prefer save havens like the yen and the Swiss franc.

A mis-match of expectations had led the US and North Korea leaders to part ways earlier than expected on Thursday.

Both the US and North Korea cited different accounts on to why the talks failed, with US president Donald Trump claiming that the hermit kingdom wanted all the sanctions to be lifted entirely while North Korea’s foreign minister said they had only asked for a partial lifting of sanctions.

Little changes for EUR/USD, EUR/GBP and AUD/USD

The euro to dollar and euro to pound was meanwhile steady, down by 0.01% and up by 0.08%, at US$1.1369 and £0.8580, respectively.

The Aussie dollar was little changed versus the dollar, up 0.01% at US$0.7095, although the better-than-expected China Caixin manufacturing data saw the currency jump to US$0.7105 earlier in the day, after being down 0.4% on the week.