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USD/JPY falls to fresh seven-month low as risk mood sours on the day

  
Analysis, Forex

USD/JPY falls to 105.24, the lowest level since the January flash crash

USD/JPY H1 12-08

Equities are hitting session lows on the day with European equities having nearly pared all of their earlier gains and US futures now trading in negative territory on the session.
This comes amid a fresh wave of risk aversion sweeping across markets and is also helping to push Treasury yields lower. 10-year yields are down by 4.5 bps to 1.70% currently and that is seeing USD/JPY be pushed to fresh lows since the January flash crash.
E-minis 12-08
As highlighted earlier, the 105.00 handle will be a key spot to watch in the near-term for USD/JPY amid ongoing cautious sentiment in markets.
Large expiries and notable bids should allow the figure level to hold up but as long as markets remain petrified by ongoing US-China trade tensions and a slowing global economy, it is but a speed bump in the road for sellers to drive the pair lower.
If price starts to break down below that, expect stops to be triggered and things could get real ugly for risk sentiment when that happens. At the same time, expect Japanese officials to chime in again with more commentary as we saw last week.

Yuan to head towards 7.10 or 7.15 per dollar by year-end – SocGen

  
Analysis, Forex
  • PBOC will watch carefully on capital outflow dynamics in the near-term
  • Doesn’t want to upset traders too much on the matter
  • If trade tensions continue to escalate, can expect USD/CNY to rise to 7.50
  • PBOC may tighten capital controls if outflows start to pick up
  • However, doesn’t expect pace of capital outflows to be as dramatic as in the past
  • Markets are more prepared to deal with a weaker yuan now
This continues to feed into the narrative as mentioned at the start of the week here and here, in that we should expect a weaker yuan over time given ongoing trade tensions but certainly not any rapid depreciation in the currency.
All this means that we’re experiencing a gradual shift in markets and one that other countries and central banks have to take note of. If anything else, we’re entering a new phase not only in the US-China trade rhetoric but also towards a global currency war of sorts.

US to delay Huaweii licences in response to China stopping crop buying

  
Analysis, Forex

Another indication of still increasing tension between the US and China – Yen bullish, risk bearish

  • White House delaying a decision about licenses for US companies to restart business with Huawei
  • This comes after China said earlier this week it was halting purchases of US agricultural products
News reported via Bloomberg , citing unnamed sources.
AUD/JPY lower:
Another indication of still increasing tension between the US and China - Yen bullish, risk bearish 
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