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USD/JPY below 110 the figure, markets ignoring dovish Kuroda, waits details of Sino/US trade deal

  • USD/JPY is back below the 110 handle and waits for the signing of the trade deal between US and China.
  • Wall Street struggled to hold onto gains overnight due to reports that tariffs will not be rolled back as past of phase-one deal. 

USD/JPY is starting out around 109.94 having travelled south from a high of 110.01 and printing a low of 109.81 below a doji printed on the closing candle after yesterday’s US session close.

Wall Street’s rally came to a sudden halt on the reports that the US will not be rolling back tariffs as part of the phase one deal. This was later followed up by quotes reported by Reuters as follows:

Subsequently, Asia equity markets have started out mostly lower following the similar negative bias with the ASX 200 (+0.2%), Nikkei 225 (-0.4%), KOSPI (-0.5%) at the time of writing. 

As per the article earlier, USD/JPY had been struggling in resistance territories and was always going to struggle at these levels. We will now have to wait and see how the market reacts to the signing ceremony, which is due to take place at the White House (reportedly 11:30am NY time but not confirmed) – the devil will be in the detail. There is news that Liu He is still at the US treasury in what was supposed to be a brief talk before dinner that is going much longer than expected, a source briefed on the schedule said. Seems there could be plenty still to be ratified – any delays to the signing will surely spook markets.

Analysts at Westpac explained that representatives of both countries should talk up the importance of the deal and stress their willingness to progress to “phase two” talks on more difficult issues.

“Markets will be looking for confirmation of newswire source reports on the scale of China’s pledged increases in purchases of US products. The default estimate is an extra $200bn of purchases over 2 years, compared to the 2017 baseline.”

Meanwhile, Kuroda is now making comments:

USD/JPY levels

USD/JPY Price Analysis: Pullback to Cloud/Bollinger-Band targets could be in play

 

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