Forex Today: Trade and Brexit hopes lift USD/JPY and GBP/USD ahead of critical talks

Here is what you need to know on Friday, October 11:

  • The market mood is cautiously positively after the US announced progress in trade talks, and President Donald Trump announced he would meet Chinese Vice Premier Liu He late on Friday. A currency pact to weaken the yuan remains high on the agenda. A partial deal seems to have higher chances than a full one. The Japanese yen and Gold are on the back foot. 
  •  However, the Chinese delegation is more tight-lipped, and the US may still insist on a full deal. Moreover, the New York Times has provided more details on the White House's ideas to limit Chinese access to US capital markets and scrutinize Chinese firms. Furthermore, Japan is worried about China's military buildup in the South Pacific. 
  • Brexit: GBP/USD is consolidating the massive 200 pips gains it enjoyed on Thursday. A three-hour-long meeting between UK Prime Minister Boris Johnson and his Irish counterpart Leo Varadkar resulted in a joint statement talking about a pathway to a deal. The Irish press hinted about major UK concessions. One option mentioned in the media is for a free-trade agreement in Ireland. Another option is that Northern Ireland leaves the EU customs union with the rest of the UK but continues following EU rules, thus allowing an open border. UK Brexit Secretary Stephen Barclay and Chief EU Negotiator Michel Barnier will meet today.  See Brexit: Three scenarios and GBP/USD price targets as B-Day approaches
  • Loretta Mester, President of the Cleveland branch of the Federal Reserve and a hawk, has expressed concern about weak business investment. Neel Kashkari, her colleague from the Minneapolis Fed and a dove, supported rate cuts. Eric Rosengren from the Boston Fed speaks later today. 
  • The economic calendar features Canada's jobs report for September, which carries modest expectations after a surge in hiring in August, and the preliminary read of Consumer Sentiment from the University of Michigan for October. See US Michigan Consumer Sentiment Preview: Concerns about the future are driving the decline in sentiment
  • Cryptocurrencies remain stable after gaining earlier this week. Bitcoin hovers above $8,500.

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