USD/JPY: Trump canceling summit with Kim Jong Un sends Yen to 109.00 handle

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  • Trump cancels the summit with Kim and says: “the world has lost a great opportunity for lasting peace” and JPY is gaining on risk-averse trading.
  • Trump is ready to impose 25% tariffs on imported vehicles to the US while the second round of trade talks between US and China lead to no conclusive agreement. 

USD/JPY is falling again on Thursday as US President Trump said that it was “inappropriate at this point to have a summit (with North Korea)”. He said that he canceled the meeting with the North Korean leader Kim Jong Un based on “the tremendous anger and open hostility” in Kim’s recent statements. “The world and North Korea, in particular, has lost a great opportunity for lasting peace and great prosperity and wealth. This missed opportunity is a truly sad moment in history.” Trump wrote.

USD/JPY has been falling off from the 110.00 handle in Asia and is finding an intraday floor at the 109.00 handle at the time of writing. The pair is down about 0.80% on Thursday.

Earlier in the week, Vice President Pence said that Kim would “end like the Libyan model” if he didn’t stop the nuclear weapon program. Kim called Pence’s remarks “ignorant” and “stupid,” and threatened to call off of the talks. Libyan dictator Moammar Gadhafi abandoned his nuclear weapons against sanctions relief in 2003 and he was killed by rebels eight years later.

Additionally, Trump recently said that he is planning to impose 25% tariffs on imported vehicles while the trade talks with China are not leading to any positive agreement; all adding to the Yen safe-haven demand.  

USD/JPY 4-hour chart 

The pair is trading below its 50 and 100-period simple moving averages (SMA) and is testing the 200-period SMA on the 4-hour chart. The main trend remains bullish but bulls will need to create a base in the 108.50-109.00 region to keep the market from falling further. Supports are seen at the 108.64 swing low and at the 107.79 swing high while resistances are seen at the 109.50 swing low and the 110.00 handle. 

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