Yen rose in Asian trade on Thursday against a basket of major rivals, extending gains for the second session and hitting ten-day highs as US treasury yields decline.

The drop in US treasury yields reduces the yield gap with Japanese bonds and underpins the yen.

However, yens performance is limited by a batch of weak Japanese data, which heaped pressure on the bank of Japan.

The Price

The USD/JPY fell 0.8% today to 153.60 yen, the lowest since May 6, with a session-high at 154.87.

The pair rose 1% yesterday, the first profit in four days away from two-week lows at 154.79 yen.

Yen also gained ground after weak US consumer prices data for April.

US Yields

US 10-year treasury yields fell by 0.7 basis points today on track for the fourth loss in a row, plumbing six-week lows at 4.313% and undermining the dollar.

The developments came after US consumer prices data were a bit below estimates, in turn boosting the case of a Fed interest rate cut in the summer.

The 10-year government yield gap between the US and Japan shrank by nearly 35 basis points so far this week, boosting the yen against the dollar.

The Japanese Economy

Earlier Japanese data showed the GDP shrinking by 0.5% in the first quarter of the year, worse than the 0.3% contraction expected.

The data showcases the pressures facing Bank of Japans policymakers as they prepare for a potential rate hike this year.