Investing.com - The U.S. dollar traded higher against the Japanese yen during Tuesday's Asian session, although some traders expect the yen to continue to weaken against the greenback.
In Asian trading Tuesday, USD/JPY rose 0.21% to 101.21 after earlier trading as high as 101.12. The pair was likely to find resistance at 101.54, the earlier high, and support at 99.26, Wednesday's low.
Earlier Tuesday, the Bank of Japan said that Japan's M2 money supply rose by a seasonally adjusted 3.8% in June following a 3.5% increase in May. May's figure was revised up from a 3.4% increase. Analysts expected a June increase of 3.4%.
The yen remains the world's worst-performing developed market currency this year even after a bout of strength in late May and some traders see rising U.S. interest rates as a possible catalyst to further depress the yen.
Yields on 10-year U.S. Treasurys have risen nearly 80 basis points since the start of the year, but the Bank of Japan's bond-buying efforts have kept Japanese government bond yields flat. The yield spread between U.S. and Japanese 10-years is about 180 basis points compared to an average of 110 basis points over the past year, according to the Wall Street Journal.
Past periods of rising interest rates have enticed Japanese investors to buy dollar-denominated assets such as U.S. bonds or stocks, a scenario that leads to yen weakness.
That scenario could repeat because on Monday Goldman Sachs said yields on 10-year U.S. Treasurys could hit 4% by 2016.
Elsewhere, EUR/JPY rose 0.10% to 130.11 while AUD/JPY fell 0.17% to 92.09.
Investing.com - Investing.com offers an extensive set of professional tools for the Forex, Commodities, Futures and the Stock Market including real-time data streaming, a comprehensive economic calendar, as well as financial news and technical & fundamental analysis by in-house experts.
Read more News on Investing.com or Follow us on Twitter at @ Newsinvesting