USD/JPY grinding higher - about time?
Amid the steady FX trade seen this week, there has been limited interest to follow some of the macro themes - top of which is risk sentiment as the market continues to wait and see or hear on any fresh developments on the US-China trade front. It seems we now have to wait until the G20 meeting at the end of the month and as we heard this morning, president Trump is ready to add new tariffs to more Chinese goods if the Chinese premier Xi does not meet him at the end of June (at the G20) to discuss matters.
Even so, stock markets have been pretty resilient again, and this may be largely down to expectations that the Fed could be ready to cut rates if the trade situation begins to have more of an impact on the US economy.
Technically, one would expect to see the USD hit to some degree on this basis, and we have indeed seen some modest losses against the EUR, but USD/JPY also factors in the mood of the equity markets and is only now starting to push a little higher.
Having survived a move under 108.10 support, USD/JPY is now looking to test towards 109.00, which is where we see the next bank of resistance, and this stretches up to around 109.20-30 or so. This may prove to be tough resistance should we get there, though in the meantime, we are seeing a slow grind higher, with long end US Treasury yields also digging in after recent losses. The 10yr Note clearly has some support ahead of 2.00%.