Yen Nears 159.00 With Treasuries Back Above 5%

New US 10-year notes sold on Tuesday pay 5% a year, the most since 2006, and the Yen has dropped to its weakest against the Dollar since mid-October. The Dollar rose to just under 159.00 Yen, more than reversing Monday's drop and moving back above Friday's close.

Fed Vice Chair for Supervision Bowman said the October consumer price figures suggest inflation pressures may persist, and that inflation isn't on a downward trend. The Fed's 3.75%-4.00% range is 2.50-2.75 percentage points above the Bank of Japan (BoJ) rate of 1.25%, so a Dollar deposit pays roughly that much more than a Yen one.

A summary of the BoJ's October meeting, released on Tuesday, shows members generally agreed rates should keep rising, and the Yen still fell. The BoJ's expected December 18 hike to 1.50% would come nine days after a Fed move to 4.00%-4.25%, leaving the gap exactly where it is.

On the calendar

US weekly jobless claims are expected at 195K, against 189K, at 13:30 GMT on Thursday. Friday at 13:30 GMT brings October producer prices, with a 6.6% annual rise forecast after 6.3%, and both bear on how far US rates go above Japan's.

Japan's October producer prices are due at 23:50 GMT on Wednesday, forecast up 6.5% from a year earlier after 6.8%. They're among the last Japanese price figures before the BoJ's December 17-18 meeting, where most economists expect a hike to 1.50%.

On the charts

The Dollar is at the top of the range it has held against the Yen since September 24, which runs down to a low near 156.00 on October 23. That range is still well below the late-July peak near 164.00 and the September 2 high near 160.50.