Forex Today: CNH bid, JPY offered as Trump backed China’s upbeat comments on trade

  • Forex today witnessed mild risk-on with Chinese yuan gaining ground against the greenback and JPY crosses on the rise.
  • Fed is considering the wait-and-see approach on future rate hikes, according to the Wall Street Journal.
  • President Trump agreed with China’s Commerce Ministry that a trade deal could be reached within the 90-day period.

Forex today saw mild risk-on action with Chinese yuan pushing higher against the greenback and JPY crosses picking up a bid, tracking mild gains in the Asian equities.

The Dow Jones Industrial Average (DJIA) which was down more than 700 points at one point Thursday, staged a V-shaped recovery after the Wall Street Journal (WSJ) reported that the Fed is considering whether to signal a new wait-and-see mentality at their December meeting.

The late recovery in the US stocks likely put a bid under the Asian equities. Major names like Japan’s Nikkei, Shanghai Composite, South Korea’s Kospi reported moderate gains. As a result, JPY crosses regained poise.

Notably, the AUD/JPY rose 0.10 percent to 81.69, having clocked a low of 80.93 in the overnight trade.

The risk assets may have also received a boost from Trump’s tweet, which China’s comments on their commitment to achieving a trade deal.

It particularly helped the CNH (offshore yuan exchange rate) push higher against the greenback.  The USD/CNH was looking north, having witnessed a falling wedge breakout in early Asia. The bullish pattern, however, failed after Trump tweeted his take on a trade deal, and the pair fell to a session low of 6.8657.

Meanwhile, the USD/JPY extended its overnight rebound from the all-important 100-day MA support to levels just below 113.00. BOJ’s Kuroda ruled out additional stimulus, but at the same time squashed hopes of near-term taper.

Looking forward, the risk assets may cheer Trump’s tweet and reports stating that Fed officials are considering signaling a wait-and-see approach on rate hikes next year. As a result, the US dollar may remain on the defensive and JPY crosses better bid ahead of the US non-farm payrolls and wage growth release.

As of writing, the Federal-funds futures used to place bets on the course of rates, show just a 7.9% chance that there will be three rate increases by June 2019, down from 30% a month ago, according to the Wall Street Journal. That rate hike probability would slide even further if the wage growth figure prints well below estimates.

Key news in Asia

  • US President Trump tweets that a trade deal with China likely within the next 90 days

  • BOJ’s Kuroda: time not ripe to exit from our monetary easing

  • BOJ official: BOJ holds 77.5 percent of Japan’s total ETF market
  • China Commerce Ministry: to appropriately deal with trade frictions

  • Chinese Yuan will breach 7 per USD within 6 months – Reuters poll

  • Trump is losing his own trade war against himself – Bloomberg

What’s brewing in the majors?

  • EUR/USD: Value of puts (bearish bets) hits 6-month low ahead of Eurozone GDP and US NFP release
  • GBP/USD trading softly into 1.2750 with US NFP in the barrel
  • USD/JPY Technical Analysis: 100-day MA again reverses pullback, BOJ’s Kuroda rules out near-term taper
Get the 5 most predictable currency pairs

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