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  • USD/JPY was  steady in Tokyo’s opening hour, weighing trade risks and upcoming events.  
  • Looking ahead, eyes are  on US Industrial Production and Fed speakers.

USD/JPY is steady in Tokyo’s opening hour, down -0.02% despite  the concerns over the ‘Phase1’ deal made between China and the US on Friday. USD/JPY has advanced from below the 108 handle on the prior optimism but was capped at the highs of 108.62 as sme doubts started to surface.  

The lack of firm agreement or details was a cause for concern on Friday and the Chinese process didn’t even print the event as headline front-page news. Instead, news was circulating that Cina neds a further meeting prior to putting anything in ink, perhaps to iron out some potential miscommunications. Nevertheless, the Global Times was somewhat more encouraging, suggesting that a breakthrough had been made. Traders await further details and clarification as to just where the US and China are within this agreement.  

Meanwhile, the NY Fed Empire State manufacturing survey was released a day early,  rising from +2 in September to +4 in Oct. Gieven the holiday thin trade, however, the markets were quiet. The US treasury markets (cash) were closed due to the  holiday but futures did traded.  Traders expect a fall in the 10-year  yield from 1.72% to 1.67%. “Markets are pricing 16bp of easing at the 31 October meeting and a terminal rate of 1.24% (vs 1.88% currently),” analysts at Westpac explained.

Looking ahead

Looking ahead for the week, eyes will be on US Industrial Production and Fed speakers. “We project industrial production to slow from its solid 0.6% m/m jump in August to 0.2% in September, largely reflecting fading manufacturing output and despite an expected rebound in growth for the utility sector. We project a flat print for manufacturing, as less supportive global demand and continued trade uncertainty continues to drag production lower,” analysts at TD Securities explained.  

Meanwhile, Fedspeak will involve  Bullard in London, Bostic at a community event and George at the event of a payment and Daly in LA. “Annual meetings of the IMF are held in Washington. JP, Goldman and Citigroup all report earnings. The 4th Democratic debate is held in Ohio,” analysts at Westpac noted.  

USD/JPY levels