FxWirePro: Daily Commodity Tracker - 21st March, 2022 
RBA Set to Hike Rates Again Amid Inflation Surge and Global Uncertainty 
Goldman Sachs Delays Bank of England Rate Cut Forecast Amid Middle East Inflation Risks 
J.P. Morgan Now Expects Two ECB Rate Hikes Amid Inflation Pressures 
Paraguay Central Bank Holds Interest Rate at 5.5% Amid Slowing Growth 
Taiwan Central Bank Expected to Hold Interest Rates Steady Through 2027 
RBA Raises Cash Rate to 4.10% in Closest Vote Since Transparent Voting Began 
Bank of Japan Eyes April Rate Hike Despite Inflation Dip, ING Says 
Goldman Sachs Raises ECB Rate Hike Forecast Amid Persistent Energy-Driven Inflation 
Fed Holds Rates Steady as Middle East Conflict Clouds Inflation Outlook 
This one pair has been at odds with yield divergence lately after acting as an excellent responder to it from 2012 (starting period of the analysis) to summer of 2015. It kept responding to yield divergence despite a drop in oil price. US-Japan 2 year yield spread rose from 0.13 percent in 2012 to 0.72 percent by May 2015 and hovered there till October but the yen was strengthening.
However, trouble started surfacing after summer. We guess it was triggered by the surprise devaluation of the yuan by the Chinese central bank, People’s Bank of China (PBoC).
The yield spread kept rising in favor of the dollar. The yield spread rose more than 30 basis point since summer of 2015, but, the yen has strengthened from 126 to as low as 98 per dollar. Currently trading at 104.8 per dollar, in anticipation of further easing from the Bank of Japan (BoJ).
It is clear that a different force other than the yield is driving the USD/JPY exchange rate as of now and it may very well continue to do so.
