· The dollar extended its recovery on Thursday, gaining versus the yen and euro, on hopes the United States and China will agree a trade truce before a G20 summit in Japan this weekend.
A dollar index rose 0.1% against a basket of currencies to 96.351. The dollar rose 0.1% against the euro to $1.1356.
The yen, which had jumped to five-month highs earlier this week, fell 0.3% to 108.10. The Swiss franc dropped 0.2% to 1.1143 francs per euro.
China’s offshore yuan rose 0.2% to 6.8778 yuan per dollar, helping the remninbi back towards a six-week high of 6.8370 yuan per dollar touched last week.
· The outcome of the Group of 20 summit is expected to influence the Fed, which opened the door to possible rate cuts after last week’s meeting.
The potential implications of the Trump-Xi meeting for U.S. monetary policy are huge, said Masafumi Yamamoto, chief forex strategist at Mizuho Securities.
“If the two sides agree not to impose more tariffs, the Fed would no longer need to cut rates,” he said. “On the contrary, if the talks point to the imposition of more tariffs, that could nudge hesitant policymakers towards rate cuts.
· The latest reports of a US-China trade truce triggered a renewed risk-on wave and knocked-off the Yen, with the USD/JPY pair now tapping on the 108 handle while markets digest the latest comments by Japan's Suga on US-Japan relationship.
In Tokyo on Tuesday, Chief Cabinet Secretary Yoshihide Suga quoted the White House as having denied a report that he had recently mentioned the possibility of terminating the post-war defense pact with Japan, which forms the foundation of the alliance between the two countries.
Technically, USD/JPY run into an active resistance area at 107.80/90 that capped the upside. Ahead of the Asian session, some consolidation and a pullback could take place considering that the gains seen on Wednesday were the biggest in months. The 107.50 zone is the immediate support, and far below comes 107.05. Below the last one, the bearish pressure will likely intensify. The 4-hour chart shows the pair with a clear bullish bias in line with technical indicators. A breakout above 107.80 could boost the greenback back above 108.00, targeting 108.30.
Support levels: 107.00 106.75 106.50
Resistance levels: 107.90 108.40 108.70
· The United States and China have agreed to a tentative truce in their trade dispute ahead of a meeting between leaders of the two nations at the G20 summit this weekend, the South China Morning Post reported on Thursday, citing sources.
Details of the agreement, which would halt the next round of U.S. tariffs on an additional $300 billion of Chinese goods, are being laid out in press releases and will be out as coordinated press releases and not a joint statement, the newspaper said.
· U.S. President Donald Trump is set to hold much-anticipated trade talks with Chinese President Xi Jinping in Osaka at 11:30 a.m. (0230 GMT) on Saturday, a White House spokesman told reporters on Wednesday.
· Boris Johnson, the favorite to become British prime minister, said the chances of Britain leaving the European Union without a deal are “a million-to-one” even as he repeated his promise to leave the bloc without a deal by the end of October.
His comments came just a day after he promised to leave the EU at the end of October “come what may, do or die”, raising fears among more moderate lawmakers in parliament that he will attempt to push through a no-deal Brexit
Earlier, Hunt took aim at rival Johnson’s “do or die” pledge to take Britain out of the EU no matter what, saying this stance could destroy Brexit an
· U.S. President Donald Trump on Thursday demanded India withdraw retaliatory tariffs imposed by New Delhi this month, calling the duties “unacceptable” in a stern message that signals trade ties between the two countries are fast deteriorating.
India slapped higher duties on 28 U.S. products after the United States withdrew tariff-free entry for certain Indian goods. Washington is also upset with New Delhi’s plans to restrict cross-border data flows and impose stricter rules on e-commerce that hurt U.S. firms operating in India.
“I look forward to speaking with Prime Minister Modi about the fact that India, for years having put very high tariffs against the United States, just recently increased the tariffs even further,” Trump said on Twitter.
Indian government sources refute Trump claim that its tariffs are very high
“This is unacceptable and the tariffs must be withdrawn!” said Trump, who will meet Modi at this week’s G20 summit in Japan.
· U.S. President Donald Trump may visit Turkey in July, Turkey’s President Tayip Erdogan said in an interview in Japan where he will attend the G20 summit and is expected to meet with his American counterpart.
Tensions have been rising between the United States and NATO ally Turkey over the latter’s purchase of the S-400 air defense system from Russia. Turkey could face sanctions under U.S. law and risks losing its partnership and delivery of F-35 fighter jets.
· Iran warned the United States against violating its borders, with parliament speaker Ali Larijani threatening a stronger reaction, the Tasnim news agency said on Thursday, a week after Tehran shot down a U.S. drone, spiking tension between them.
· Treasury Secretary Mnuchin says sanctions must be working for Iran leadership to be so upset
U.S. Treasury Secretary Steven Mnuchin believes the latest round of economic sanctions against Iran must be working, citing the recent backlash from Tehran’s leadership as proof.
· Oil prices fell on Thursday to erase some of the previous session’s strong gains, as traders wait for the G20 summit in Japan and for a meeting of OPEC and other crude producers to decide on an extension of output cuts.
Brent crude futures were down 42 cents, or 0.6%, at $66.07 by 0658 GMT.
U.S. West Texas Intermediate (WTI) crude futures were down 33 cents, or 0.6%, at $59.05.
Oil prices rose more than 2% on Wednesday to their highest in about a month, buoyed by U.S. government data showing a larger-than-expected drawdown in crude stocks as exports hit a record-high and surprise drops in refined product stockpiles.
Reference: CNBC, Reuters, FX Street
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