Japanese Yen Flat amid Confusing News Headlines About US-China Trade Deal

The Japanese yen was flat against most of its major rivals amid conflicting reports about the probability of reaching a phase-one trade deal between the United States and China before the new US tariffs, scheduled to take effect on December 15, will kick in. Domestic macroeconomic data was relatively good but slightly worse than expected.
Markets started Wednesday’s trading session in a risk-off mode due to comments made by US President Donald Trump at the NATO summit in London yesterday. He signaled that there is no strict deadline for the trade talks with China and he can wait till the Chinese election in November 2020. Trump said:

In some ways it’s better to wait until after the election for the China deal. But they want to make a deal now.

Yet the sentiment shifted after Bloomberg told in a report that a phase-one deal can still happen before December 15, 2019. The article said:

The people, who asked not to be identified, said that U.S. President Donald Trump’s comments Tuesday downplaying the urgency of a deal shouldn’t be understood to mean the talks were stalling, as he was speaking off the cuff. Recent U.S. legislation seeking to sanction Chinese officials over human-rights issues in Hong Kong and Xinjiang are unlikely to impact the talks, one person familiar with Beijing’s thinking said.

U.S. negotiators expect a phase-one deal with China to be completed before American tariffs are set to rise on Dec. 15, the people said.

As for macroeconomic data in Japan, the Jibun Bank Japan Services PMI climbed from 49.7 in October to 50.3 in November. The actual reading slightly missed the median forecast of 50.4. The report was not particularly optimistic, commenting on the result:

The seasonally adjusted Business Activity Index rose back above the crucial 50.0 mark in November to signal renewed growth during November. However at 50.3, the headline index was only indicative of marginal growth that was noticeably weaker than the expansions seen on average across the first three quarters of the year.

USD/JPY was about flat at 108.59 as of 13:15 GMT today. CHF/JPY fell from 110.03 to 109.91. CAD/JPY rose from 81.69 to 81.80.

If you have any questions, comments, or opinions regarding the Japanese Yen, feel free to post them using the commentary form below.

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