USD/JPY edging closer to the psychological 105.00 mark
As a primary risk indicator, USD/JPY has been moving lower again and looks intent on testing 105.00 over coming sessions. Just as we saw into 105.50, we expect to see some barrier protection slowing moves towards this level, though with the risk tone as heavy as it is, the pressure is likely to continue. The BoJ are also likely to be keen to see losses moderated - at least in terms of pace - so any grind lower will be just that, unless we get news of more combative trade policy from the White House, ie, more tariffs.
Overnight, the PBoC - the Chinese central bank - fixed the onshore USD/CNY rate at 7.0200, which was a touch higher than levels seen on Friday, so this has fed into some market unnease, leading to JPY strength this morning.
Otherwise, it is a quiet session in terms of data, so politics and stock market sentiment will dictate trade in the FX markets today, and so far it is a quiet start with summer markets also showing limited conviction in the early hours of Europe so far.