FX Action: USD-JPY has remained settled in the lower 111.0s
FX Action: USD-JPY has remained settled in the lower 111.0s, above the two-week low that was printed on Monday at 110.75. Commitment in markets has been limited, with strong corporate earnings and China's course for fiscal stimulus offset by concerns about long-term trade protectionism. Focus today will fall on the meeting between the President Trump and European Commission President Juncker, where few are holding out for any breakthrough on their differences on trade. In Japan, markets continue to digest the recent Reuters report that, according to sources, the BoJ is in "preliminary" discussions to tweak its stimulus program to make it more sustainable, which has seen Japanese yields rise and the yield curve steepen sharply, although yields dipped back some today with markets taking reassurance after the central bank conducted regular purchases of government debt in the expected amount. This helped the hard-hit long-dated JGBs, driving the 10-year JGB down by 1.5 bp and the 20-year JGB yield by 3.5 bp after spiking over 10 bp over the previous two days. The BoJ meets on policy next Monday and Tuesday. Market narratives are expressing doubt that the BoJ will do anything other than confirm it is starting to look at making stimulus sustainable. Markets are also anticipating the central bank to trim inflation forecasts. Analysts anticipate a broadly sideways trend in USD-JPY. Support comes in at 110.75-80 and 110.60-63, levels which encompass daily lows and the prevailing situation of the 50-day moving average.