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  • Markets turn risk-averse following a quiet Asian session.
  • US 10-year T-bond yield erases more than 3%, inches closer to record lows.
  • Wall Street looks to open in red after China comments on US tariffs.

The USD/JPY pair rose to a daily high of 106.78 during the Asian session supported by improving market mood but failed to stay in the positive territory as the latest headlines surrounding the US-China trade dispute triggered a fresh risk-off wave, revealing how fragile the risk perception is. As of writing, the pair was down 0.08% on the day at 105.80.

Responding to the United States’ decision to impose 10% additional tariffs on some Chinese imports next month, China today said that it will have to take retaliatory measures and noted that the US action was violating the consensus reached at the G20 meeting in Osaka.

US stocks futures and T-bond yields turn south

The modest recovery seen in the US Treasury bond yields quickly lost its momentum on these remarks and the yield on the 10-year reference is now losing 3.5% on the day and is inching closer to the record low of 1.321% set back in July 2016. The S&P 500 Futures also turned red in the day to suggest that Wall Street is likely to start the day in the negative territory after losing nearly 3% on Wednesday.

Today’s economic docket in the US will feature retail sales, industrial production and weekly jobless claims data. However, markets are likely to ignore today’s releases and stay focused on market sentiment. Earlier today, the data from Japan showed that industrial production in June contracted by 3.3% on a monthly basis but didn’t have an impact on the JPY’s market valuation.

Technical levels to watch for