FX Update: Most pairings and cross rates have posted narrow ranges
FX Update: Most pairings and cross rates have posted narrow ranges so far today, although USD-JPY and some yen crosses saw some movement, rising during the Tokyo AM session before ebbing back. USD-JPY posted a two-month high of 112.98, capping out here in the face of Japanese exporter offers. EUR-USD settled in the mid 1.1700s, below the two-month high seen yesterday at 1.1815, which was seen after ECB President Draghi sounded relatively hawkish on inflation. Cable has settled in the lower 1.3100s. There are a number bank analyst notes in circulation promoting a bullish view of sterling on the basis that the currency's Brexit discount has potential to be unwound in the likely event the UK and EU reach a deal (which GS pegs at a 70% probability), which would pave the way to a two-year post-Brexit transition period. The Sino-U.S. trade war remains a backdrop concern with China saying today that talks with the U.S. cannot take place under threats and pressure, while the U.S. approved of a $330 M arms sale to Taiwan, which is sure ruffle feathers in Beijing. The Fed starts its two-day FOMC policy meeting today, which is widely expected to bring a 25 bp hike in the funds rate, leaving focus on the guidance. The Italian government's budget planning is also in sharp focus this week.