Yields are driving the USD/JPY exchange rate toward 134.50, and anxieties about wage growth and an economic slowdown have turned the focus

At Thursday's Tokyo open, the USD/JPY accepted bids to renew intraday lows near 134.90, preserving the week's gains. Recent weakness in the yen pair may be related to speculation about the state of Japan-China ties and the job market in the Asian superpower. Bears can find encouragement in the most recent Fed Minutes. Bears in the session are bolstered by worries of a recession, and bulls in the pair are still holding on.

Takeo Akiba, Japan's National Security advisor, and Yang Jiechi, China's Foreign Minister, reportedly agreed to continue discussions to establish a positive and stable alliance, as reported by Japan's local media Jiji earlier in the Asian session.

Elsewhere, On Thursday, a monthly Reuters poll showed that more major Japanese companies are increasing pay to attract workers and address persistent personnel shortages. That's encouraging because it suggests Japan's corporate sector is beginning to address the issue of decades of stagnant pay.

Current US 10-year Treasury yields of 2.89 percent are down from the week's high of roughly 2.90 percent. Both the disappointing FOMC meeting minutes and the risk-positive China Securities news were ignored by the benchmark bond coupons. According to the Federal Reserve Minutes, officials were unanimous in their support of the 75 basis point rate hike in August and expected future rate hikes to be less rapid. In addition, the Minutes revealed that Fed officials were aware of the risk that the Fed could tighten policy too far.

In order to spur investment, China may issue an additional 1.5 trillion yuan in debt, according to China Securities news.

As a result of these wagers, the S&P 500 Futures decline by 0.25 percent, reflecting Wall Street's poor showing, while the Nikkei 225 index in Japan has daily losses of close to 1 percent.

Trading pairs should focus on the weekly releases of US Initial Jobless Claims and the Philadelphia Fed Manufacturing Survey for August in the absence of other relevant data/events.

In order to consolidate their gains, USD/JPY bulls need to push the pair over the 50-day moving average near 135.40. The 21-day moving average is a support level around 134.50, therefore a dip towards that level cannot be ruled out until then.