Market Drivers April 6, 2017
USDJPY recovers Asia Wobbles
CNY PMIs at 6 months lows
Nikkei -1.50% Dax -0.59%
Oil $51/bbl
Gold $1256/oz.

Europe and Asia:
CNY Caixin Services PMI 52.2 vs. 53.2
EUR Retail PMI 49.5 vs. 49.9

North America:
USD Weekly Jobless 8:30
CAD Building Permits 8:30

USDJPY plunged to fresh session lows in early Asia trade today dropping to 110.28 before stabilizing in morning European dealing and rising back towards the 111.00 figure.

The pair was hit hard yesterday on the close after the release of FOMC minutes failed to provide any clarity on the Fed balance sheet issue and traders began to worry about President Trump’s stalled legislative agenda. Those worries carried over into early Asia session trade with Nikkei dropping more than 1% and dragging USDJPY with it. But as European markets have settled down the pair recovered most of the lost ground and was trading 110.80 by mid-morning Frankfurt dealing.

With no economic data of any sort today except weekly jobless claims, trading today is likely to be dominated by political headlines with Trump/Xi summit likely dominating the spotlight throughout the day. The general consensus is that the dialogue should be collaborative. President Trump has already backed off claims that China is a currency manipulator and President Xi did not assert any aggressive tone ahead of the summit.

Should the news from Mar-a-Largo prove positive, it will help risk sentiment enormously and likely push USDJPY above the 111.00 mark as investors will feel relief over the single most important trading relationship in the world. However, if the tone of the discussion turns confrontational and both sides begin to cite a litany of accusations against each other, the markets could sell off viciously.

With risk assets highly elevated, any threat to the current world trade order could send shivers through all the capital markets and USDJPY could quickly tumble through the key 110.00 figure as the day proceeds.