Treasury yields higher. Gold moves lower.
The formula has been pretty consistent.
USDJPY moves higher.
Bond yields go higher.
Gold goes lower.
The wheels were put in motion on comments from Trump that tax plan was forthcoming. The treasury market had started to increase their doubt - or so it seemed - to action on that front from the President. The high yield peaked at 2.64% in the 10 year, but that was back in December. The January high reached 2.55%. Today, the low extended to 2.32% - close to he January lows and the 38.2% of the move up from the November low. It has moved back up to 2.385% today. Is the low in place? A major tax change would bring back the bond bears (the yield higher).
Gold has followed the same path of the treasuries but in reverse. It started to move lower on election day, bottomed in December. The move higher has been stronger with the price moving above the 38.2% AND 50% of the move lower. The price is down today and looks to retest the 50% of the move down from November at 1229.27. A move below would be a bit more bearish technically. A higher dollar would encourage lower gold once again. The 1218.29 is the 100 day MA. That would be another level to get below.
For the USDJPY, the pair peaked in December, moved below it's 38.2% of the move down from the November high this week, but is racing back higher today.
Looking at the 4-hour chart of the USDJPY, the pair has moved to new highs and looks toward the next target at the 100 bar MA at 113.397. The high just peaked at 113.29. The 50% of the move down from the Jan 27th high comes in at 113.47. There is room to move higher. The 38.2% of the move down from the peak in December comes in at 114.27. That would just a modest correction, IF the buyers can keep the momentum going.
First things first though and that is to get and stay above the 100 bar MA at the 113.379 level. Close support/risk now comes in at 113.00-03 area.
PS Abe is in town this weekend to visit Trump. Currency talk is apparently not on the agenda. The move lower over the last few weeks in the USDJPY, has been helped by the fear of the wrath of Trump. If the weekend meetings are about getting his way on trade - without talking about currencies, or if Trump realizes that the USDJPY is right smack near the middle of the range since 1998 (see chart below), the USDJPY might just head more to the upside.
Follow the technicals. They will tell the story.