- US Dollar Index struggles to find direction for the second straight day.
- Report claims the US’ bullying tactics could backfire in trade talks with China.
- 10-year US Treasury bond yield reverses its direction, turns negative on the day.
After climbing to its highest level in more than two weeks at 108.16, the USD/JPY pair lost its traction in the last hours and erased its daily gains. As of writing, the pair was virtually unchanged on a daily basis at 107.84.
The latest reports surrounding the U.S. – China trade conflict ahead of the critical G20 summit, at which U.S. President Trump is expected to meet with his Chinese counterpart Xi, caused the positive impact of trade optimism on the market sentiment to fade away.
According to The Wall Street Journal, China is insisting that the U.S. lifts all punitive tariffs as part of an agreement. On the other hand, Chinese news outlet the Global Times claimed that Chinese analysts saw President Trump’s threat of additional tariffs just before the meeting as a bullying tactic that is likely to backfire. “Some Chinese analysts are not optimistic about the outcome of the meeting given the widening divisions between the two countries, particularly after the US’ latest threats,” the GT wrote.
The 10-year US Treasury bond yield, which rose to a fresh weekly high earlier today, reversed course on these headlines and was last down 0.53% on the day at 2.038%.
Later in the day, final reading of the first-quarter GDP growth in the U.S. will be looked upon for fresh impetus. A disappointing figure could put the greenback under a renewed pressure as it would revive speculations of a 50 basis points rate cut in July. Ahead of this data, the US Dollar Index is virtually unchanged on the day at 96.20.
Technical levels to watch for
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