Treasury yields are slipping across the curve
And the drop in yields here is what is weighing on yen pairs so far today. USD/JPY is now trading at session lows of 112.31 as Treasury yields continue to move lower. 10-year yields are down by 3.5 bps currently, at 2.821% - the lowest since 27 August.
There is some resistance for Treasuries as yields approach 2.80% so that will be a key area to watch in US trading later. As currencies are already pricing in a dovish Fed tomorrow, it looks like bond traders aren't going to just be sitting around waiting on the decision.
I still reckon yields will find some form of support to hold around current levels. The current economic cycle in the US has at least one or two decent years left in it and the Fed will still hike rates next year - albeit most likely at a slower pace. But that's a thing for markets to deal with once presented with more clarity, and that begins after the Fed tomorrow.
