USDJPY Benefits as US/China Trade War Fears Ease

USDJPY talking points:

USDJPY is creeping higher after its steep losses earlier this year.

It’s being helped by US administration comments that suggest the US and China could negotiate on tariffs and trade.

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And take a look at our Q2 forecasts for the major currency pairs, gold, oil and equities.

US/China trade worries recede

Hopes that a full-scale trade war between the US and China can be avoided are strengthening the US Dollar against the Japanese Yen, which is seen as a bolt-hole for investors looking to reduce their exposure to riskier assets.

Speaking Wednesday, US President Donald Trump’s economic adviser Larry Kudlow said he does not see the spat as a trade war and described its as a “negotiation, using all the tools”. US Commerce Secretary Wilbur Ross also eased tensions, saying on CNBC that “it wouldn’t be surprising at all if the net outcome of all this is some sort of negotiation”.

Their comments boosted USDJPY, extending the uptrend that has been in place since March 25 after steep falls earlier this year.

USDJPY Price Chart, Daily Timeframe (Year to Date)

Chart by IG

Why International Trade Disputes Matter for Foreign Exchange Rates

On Thursday, the price of gold, which like the Japanese Yen is seen as a safe-haven asset, also lost ground as trade tensions eased. The improvement in sentiment was helped further by comments from Cui Tiankai, China’s ambassador to the US, who said it is also China’s preference to resolve the dispute through negotiation.

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— Written by Martin Essex, Analyst and Editor

Feel free to contact me via the comments section below, via email at martin.essex@ig.com or on Twitter @MartinSEssex

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