USD/JPY holds steady near 108.75 amid Hong Kong woes, trade hopes

• USD/JPY consolidates last week’s rebound below 109.00.

• Hong Kong unrest weighs on risk sentiment in Monday’s Asian trades.
• All eyes to remain on US-China trade negotiations amid light US calendar.

The USD/JPY pair is seen treading water around 108.75 region, as a sense of caution prevails in Monday’s Asian trading amid escalating Hong Kong violence.

Meanwhile, the US-China trade negotiations continue to remain the central focus, with mixed messages delivered by both sides last week.  The US officials continue to sound optimistic about a likely trade deal while shifting demands from Chinese officials have led to some trade uncertainty, as we near the Dec 15 US tariffs hike on China’s imports.

On the Hong Kong civil unrest, the situation is extremely fluid and unstable after the protestors remain defiant and set Hong Kong’s Polytechnic  University entrance ablaze after the police trapped hundreds of them in the University.

Therefore, the risk-off sentiment emerges as the underlying theme at the start of the week so far, with S&P 500 futures down -0.15%, Treasury yields losing nearly 0.50% while the Asian equity markets trade with mild losses. The anti-risk Yen, thus, remains underpinned, keeping a break above the 109 handle (200-DMA/ round number) elusive.

Further, the US dollar extends its recent bearish momentum across its main peers amid losses in the Treasury yields, in turn, weighing down on USD/JPY. Markets eagerly await some clarity on the US-China trade front and FOMC minutes for fresh trading impetus, as the US calendar appears light this week.

USD/JPY Technical levels to consider