- The 10-year US Treasury bond yield posts modest recovery gains on Friday.
- US Dollar Index continues to move sideways above 96.
- Annual Core PCE Price Index expected to remain unchanged at 1.6% in May.
The USD/JPY pair is fluctuating in an extremely tight range on Friday as investors are refraining from making large bets ahead of the critical G20 meeting in Japan. As of writing, the pair was trading at 107.70, down 0.07% on a daily basis.
Markets will be waiting for headlines surrounding the meeting between President Trump and his Chinese counterpart Xi over the weekend. Ahead of that, market sentiment is showing signs of improvement with the 10-year US Treasury bond yield adding 0.5% on the day and the S&P 500 futures pointing out to a positive start in Wall Street.
Previewing this crucial event, “the schedule from the White House allows only about 90 minutes for the meeting on Saturday, before Trump is due to meet Turkey’s Erdogan. This raises the suspicion that the meeting will largely be a rubber stamp of a pre-agreed policy tweak,” noted Westpac analysts. “It’s not obvious that an agreement is within easy reach in 90 minutes. However, with the US willing to suspend the threat of 25% tariffs on the $300bn or so of China goods imports that are not already subject to tariffs, there is a keen sense that both sides should be able to agree to further talks.”
Meanwhile, before the U.S. Bureau of Economic Analysis reports the core Personal Consumption Expenditure Price Index, the Fed’s preferred gauge of inflation, the US Dollar Index is posting small daily losses but stays in its weekly range above the 96 mark. Markets expect the annual core PCE price index to come in at 1.6% on a yearly basis in May. A higher reading could help the greenback gain traction as it would likely weigh on the probability of rate cut expectation in July.
Technical levels to watch for
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