Market Drivers June 27, 2019
USDJPY pops 108.00 figure
EZ CPI in line
Nikkei 1.19% Dax 0.58%
UST 10Y 2.06%
Oil $58/bbl
Gold $1402/oz.

Europe and Asia:
EZ GE CPI

North America:
USD GDP 8:30

Optimism on trade continued to support USDJPY today with the pair taking out the 108.00 figure in Asian session trade.

Although there was no fresh news on the trade front, sentiment remained hopeful into the G-20 meeting which starts today. Chinese authorities remained neutral in their tone but did confirm that Lighthizer and Liu had a good call on June 24 ahead of the summit.

It’s still unclear just how progress has been made in negotiations, but even the possibility of a “truce” with the US agreeing not to add or raise any further tariffs could be seen as a positive sign by the market, although investors certainly want to see more and so do both leaders who are facing economic pressures at home.

President Xi, however, cannot be seen as weak under any circumstances which is why the G-20 may be fraught with peril for any market traders expecting meaningful action. Still, as long as the two parties do not return to the bellicose tone of the past month risk flows may continue to improve which would suggest that this weeks lows in USDJPY below 107.00 and the US 10Y below 2.00% may have been sentiment bottoms in the near term.

With no major data on the docket today, the focus will remain on Osaka and trading could be become more unstable going into the weekend, with risk FX reacting to every headline out of G-20.