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  • Trump sad will be talking to China next week and that China wants a deal.  
  • USD/JPY  drifting through the 107 handle to score a fresh high of 107.38.

USD/JPY climbed from a low of 104.44 at the end of August ad has since been drifting through the 107 handle to score a fresh high of 107.38 as markets focus on central banks stimulus measures and prospects of a trade war truce between China and the US while the Brexit-can is likely to be kicked down the   road.  

USD/JPY is currently trading 107.35 having travelled between a low of 107.18 and 107.38, +0.11% higher on the session so far –  In recent trade, Trump has crossed the wires and said that the US will be talking to China next week and that China wants a deal.  

ECB and central bank stimulus helping risk sentiment along

With the Europan Central Bank around the corner and the Chinese adopting stimulus measures, the Dollar can firm up and positive market sentiment can support equities higher which in turn reduces the desirability of safe havens, such as the Yen. As for Brexit, the UK bill that stops a no-deal Brexit on 31 Oct became law and now that Boris Johnson has lost the vote for a general election, this law forces the prime minister to ask for a three-month Brexit delay if he hasn’t achieved a deal by 19 Oct – Boris Johnson will go to the EU Summit on October 2017.  

Overnight, yields were in focus and the US 2-year treasury yields rose from 1.53% to 1.59%, while the 10-year yield rose from 1.56% to 1.64% – “Markets are pricing 25bp of easing at the 19 September Fed meeting, and a terminal rate of 0.92% (Fed funds rate currently 2.13%),” analysts at Westpac explained.  

USD/JPY levels

Valeria Bednarik, the Chief Analyst at FXStreet, explained that the USD/JPY pair is trading near a daily high of 107.19, maintaining a short-term positive stance, although below a critical Fibonacci resistance at 107.45, the 61.8% retracement of the August decline:

“In the 4 hours chart, the pair held above its moving averages, with the 20 SMA advancing below the larger ones, skewing the risk to the upside. The RSI indicator keeps heading north,  currently at 66, while the Momentum indicator diverges lower, holding anyway within positive levels.”