JP10Y PLAYS A KEY ROLE IN YEN TRADING ACROSS ALL PAIRS
Interest Rate Differential: When JGB yields rise, it increases the interest rate differential between Japan and other countries. This makes JPY more attractive to investors, causing the currency to strengthen.
2. Capital Inflows: Higher JGB yields attract foreign investors seeking higher returns, leading to capital inflows into Japan. This increased demand for JPY causes the currency to appreciate.
3. Reduced Carry Trade: A higher JGB yield reduces the attractiveness of the carry trade, where investors borrow JPY at low interest rates to invest in higher-yielding assets. Reduced carry trade activity leads to a stronger JPY.
4. Increased Hawkishness: Rising JGB yields may signal a more hawkish stance from the Bank of Japan (BOJ), which can lead to a stronger JPY.
Interest Rate Differential: When JGB yields rise, it increases the interest rate differential between Japan and other countries. This makes JPY more attractive to investors, causing the currency to strengthen.
2. Capital Inflows: Higher JGB yields attract foreign investors seeking higher returns, leading to capital inflows into Japan. This increased demand for JPY causes the currency to appreciate.
3. Reduced Carry Trade: A higher JGB yield reduces the attractiveness of the carry trade, where investors borrow JPY at low interest rates to invest in higher-yielding assets. Reduced carry trade activity leads to a stronger JPY.
4. Increased Hawkishness: Rising JGB yields may signal a more hawkish stance from the Bank of Japan (BOJ), which can lead to a stronger JPY.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.