USD/JPY steadies above 109.50 as markets await confirmation of trade deal
|- China indicates a phase-one trade deal is not yet finalized.
- US Dollar Index rebounds modestly toward the 97 mark.
- Coming up: Retail Sales and Business Inventories data from US.
Despite the broad-based USD weakness, the USD/JPY pair registered decisive gains on Thursday and continued to push higher on Friday. However, with investors looking to see if a phase-one trade deal between China and the United States is reached as the latest reports had suggested, the pair seems to have lost its bullish momentum for the time being. As of writing, the pair was up 0.33% on the day at 109.66.
Trade uncertainty caps pair's gains
In addition to heightened hopes of the US cancelling the December-15 tariff hike on Chinese imports, British Prime Minister Boris Johnson's landslide victory eased concerns over a no-deal Brexit and provided an additional boost to the risk appetite. The 10-year US Treasury bond yield, which added more than 5% on Thursday on the back of risk-on flows, is now down 0.5% on the day to reflect the markets' cautious stance.
Reporting on China's approach to latest developments surrounding the trade dispute, "none of China’s state-owned media outlets or economic agencies involved in the trade negotiations made any public statement on Friday about the deal endorsed by Mr. Trump," wrote The Wall Street Journal's Linling Wei. "At a regular news briefing, Foreign Ministry spokeswoman Hua Chunying referred only to how news of the agreement helped fuel a surge in U.S. and European stocks."
While investors are waiting for a confirmation of a phase-one deal, Retail Sales, Import and Export Price Index, and Business Inventories data from the US will be looked upon for fresh impetus.
Technical levels to watch for
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