FX Update: The Yen has continued to soften
FX Update: The Yen has continued to soften, while the Australian and New Zealand Dollars have continued to outperform. USD-JPY rose for a fourth consecutive day, this time printing a fresh seven-week high at 111.13. AUD-JPY, which is seen as both a proxy for China risks and a general forex market barometer of global investor risk appetite, rallied over 0.6%, posting a nine-day high at 79.19. Cautious optimism about the prospects for a compromise at the current round trade discussions between the U.S. and China have been maintaining risk appetite, although stock markets have turned somewhat flat in Asia. Bloomberg reported President Trump was considering pushing back the March-1 deadline by 60 days, according on unnamed sources. This follow remarks by Trump earlier yesterday that talks were "going along very well." The president also appeared to move back toward backing a deal in Congress on funding for a border barrier. Also in the mix were better than expected trade January numbers out of China, where exports unexpectedly rose 9.1% y/y, wrong-footing market fears for a decline, while imports contracted much less than expected, by 1.5% y/y. The MSCI’s Asia-Pacific (ex-Japan) equity index fell 0.2%, down from four-month highs, while Japan’s Nikkei closed near flat after edging out a new high or the year. The U.S.-China trade talks, now at a senior level with U.S. Treasury Secretary Mnuchin and Trade Representative Lighthizer having joined the discussion in Beijing today, will remain the dominant focus.