USD/JPY Forecast September 2-6 – Further salvos in U.S-China trade war boost yen

USD/JPY fundamental movers

In the U.S., it is becoming increasingly clear that second-quarter growth will be significantly weaker than Q1, and there is a strong likelihood that the Fed will introduce further rate cuts in 2019. Second-estimate GDP for Q2, came in at 2.0%, matching the estimate. This was a slight downward revision from initial estimate, which came in at 2.1%. Durable goods orders improved to 2.1%, up from 2.0% a month earlier. However, core durable goods orders declined by 0.4%, the first decline in six months. The week wrapped up with UoM consumer confidence, which dropped sharply to 89.8 in July, down from 98.4 in June. This marked the first time that the key confidence indicator has dropped below the 90-level since October 2014.

The U.S-China trade war has escalated, as new tariffs on both sides took effect on September 1. The U.S. imposed new 15% tariffs on $125 billion worth of Chinese goods, while China has retaliated with new tariffs of 5% and 10% on an unspecified value of U.S. goods, including oil imports.

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