USD/JPY edged lower on Tuesday, as concerns over a full-blown banking crisis seemed to have diminished, curbing safe haven demand.
The Japanese Yen firmed strongly, driven mostly by flows associated with the end of Japan’s fiscal year on Friday.
According to Kristina Clifton, analyst at Commonwealth Bank of Australia, Japanese banks may seek USD funding prior to Friday, March 31st.
Yesterday the major currency pair rose as much as 0.62%, as it tracked a 15 basis point increase in US 10-year Treasury yield.
The yield on 10-year Treasuries was up 0.80% on Tuesday to 3.556%.
The market has taken some respite following news of First Citizens BancShares agreeing to acquire all of Silicon Valley Bank’s deposits and loans.
However, “there is a big cloud – I won’t say dark cloud, but definitely a cloud – and I think people are at least positioning for what they need to do if this thing moves in the wrong direction,” Bart Wakabayashi, branch manager at State Street, was quoted as saying by Reuters.
“For the moment, dollar is king – dollar is paying interest rates, dollar is safe. Even if it gets sold off, it won’t be huge, and it will bounce back.”
As of 9:12 GMT on Tuesday USD/JPY was edging down 0.34% to trade at 131.079. Yesterday the major Forex pair went up as high as 131.759, which has been its strongest level since March 22nd (133.002).
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