Kevin Buckland, Tom Westbrook

SINGAPORE/TOKYO – On Thursday, the U.S. Dollar found support in Asia as commodities currencies took a break from a sharp rally that was driven by higher export prices. A recovery on the U.S. Bond Market offered no relief for the struggling yen.

Following a small overnight decline, New Zealand and Australian dollars hovered below their multi-month highs. Euro was at $1.0989.

On Wednesday, the yen fell to 121.41 dollars per dollar for six years. It was trading near that mark at 121.25 on morning trade. Investors expect that the Bank of Japan will be slowing down in tightening policy by major central banks against inflation.

A U.S. Federal Reserve that is ever more hawkish has widened the policy gap with Japan. However even though an overnight stabilization in Treasury markets after several sessions of severe selling did not seem to help the yen,

Shinichiro Kaidota (senior FX strategist) stated that the fundamental drivers for dollar/yen are U.S. rate and Japan’s current account deterioration due to high oil prices. Barclays Tokyo (LON)

Technically, 121.7 is the highest high since early 2016. That would make it the next target. However, 125 might be in focus if we surpass that.

After being battered by yet another round of aggressive U.S. rate rise bets, Benchmark 10-year Treasuries recovered their composure overnight. However, yields have fallen by 9 basis point (bps), though they still exceed 50 bps for the month.

The Australian dollar was steady at $0.7494, after briefly rising above $0.75 overnight. New Zealand dollars were 0.2% lower at $0.6960.

Sterling lost overnight but was slightly weaker on Thursday, at $1.3187. This was even though February inflation was higher than forecast. [GBP/]

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Prices for currency bids at 0230 GMT