Macro Events & News

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Asian Market Wrap: 10-year Treasury yields pared some of their earlier gains and are down -0.2 bp on the day at 2.844%, 10-year JGB yields are still up 0.1 bp but at 0.088% also down from earlier highs as the buoyant mood on equities starts to fade and the Yen strengthened against the Dollar. Asian stock markets still benefited from hopes for a bilateral trade deal between the US and Mexico and mostly extended yesterday’s gains after a strong close on Wall Street. Questions over where the deal will leave Canada seem to limit the room for further gains, however, as investors clamour for detail. Topix and Nikkei are still up 0.26% and 0.19% respectively, but off highs. The Hang Seng managed to hang on to a modest 0.17% gain, while mainland China underperformed with CSI 300 and Shanghai Comp down -0.19% and -0.12% respectively. US futures are slightly higher, Oil prices fell back from highs above USD 69 per barrel.

FX Update: USDJPY flipped back above 111.00, continuing an oscillation of this level for a third consecutive session, holding below the three-week high that was printed on Friday at 111.48. Yen crosses have been more buoyant, with EURJPY and AUDJPY, for instance, posting respective 4- and 3-week highs during the Tokyo AM session, although both crosses have since come off by between 20 and 30 pips. The Yen’s overall weakness has been concomitant with the USA500 closing at a record high yesterday and generally upbeat tone in global equity markets. Yield differentials remains a fundamental bullish driver for USDJPY, but the risks being posed by the Us-China trade war, which doesn’t so far show any signs of cooling in the wake of the US-Mexican agreement in principle, has been capping upside potential in recent months, which is is expected to remain the case. Regarding the US-China trade situation, Trump said (in the wake of his stage-managed Mexico announcement) that “it’s just not the right time to talk right now.” USDJPY has resistance at 111.48-50 and 112.15, and support at 110.93-95