USDJPY, H1
A moderate risk-off theme has become re-established in global markets, which pushed Treasury and other top-tier sovereign yields lower and hit stock markets while buoying the Yen in forex markets. USDJPY ebbed moderately lower as the Japanese currency picked up a safe-haven bid, breaking free of what had been a narrow orbit of the 109.50 level. A two-week low was set at 109.20. EURJPY and other Yen crosses also softened.
A South China Morning Post¹ article shone a light on the depth of US-China trade tensions, citing unnamed Chinese officials blaming the Trump administration for the recent breakdown in negotiations, claiming that the US “kept adding new demands in the late stages of the negotiations,” asking for changes that would in some cases “directly affect China’s political and social stability.”
Elsewhere, EURUSD eked out a three-session low at 1.1175, returning the focus to the two-year low seen last week at 1.1107. The results of the EU parliamentary elections saw far right nationalist parties win an unprecedented share of seats, but less than had been expected, while green parties fared much better than had been anticipated. Sterling saw some choppy price action as the UK election results were digested.
Cable printed a two-session low at 1.2654 before settling near 1.2680. The Brexit Party’s success at the EU parliamentary elections will strengthen the odds for the Conservative Party to opt for a candidate with strong Brexit-supporting credentials to become the new party leader, and thereby the new prime minister. However, while the Brexit and UKIP parties took 35% of the vote, the anti-Brexit parties collectively took about 40% of the vote.
Stuart Cowell
Head Market Analyst
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