USD/JPY consolidates gains made on tariff war hopes

Aug 01 03:08 2018 Print This Article

Are seats at the negotiating table being dusted off?

News breaking late yesterday that the US and China have plans once again to sit at the negotiating table and hopefully diffuse an escalating trade war helped risk sentiment. The announcement comes ahead of the next scheduled introduction of tariffs on $16b of Chinese imports, possibly this week. However, initial comments from US officials caution that a definite timetable, topics for discussion and the format of the talks have not been finalized. Taking some of the shine off this positive news were headlines suggesting the Trump administration is considering increasing the tariff rate on the next $200b worth of Chinese goods from 10% to 25%.

Trade war breakthrough?

The initial reaction in NY currency markets was for the JPY to weaken amid a greater appetite for risk, with USD/JPY hitting an eleven-day high of 111.95. Wall Street was already on a roll as Facebook results beat estimate and the trade news helped the industrial sector. The Asian session struggled to maintain this momentum and USD/JPY traded in a tight range, managing to eke out gains of just 0.01%. Equity markets across the region traded in the red.

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