FX Update: The yen has softened
FX Update: The yen has softened today amid a modest correction in risk-off positioning in forex markets, which has been concomitant with a 0.4% rebound in S&P 500 futures after the cash version of the index closed on Wall Street with a 2.4% loss. Asian equity markets are mostly showing declines, though most have pared steep losses seen in early trading. Both U.S. and China have given mollifying remarks to investors. China's State Councillor Wang Yi said earlier that both sides that "the ability and wisdom to resolve each other’s reasonable demands, and in the end reach a mutually beneficial, win-win agreement." President Trump for his part said that he will meet with President Xi at the late-June G20 summit, while Treasury Secretary Mnuchin stated that talks with China remain ongoing. At the same time, the Trump administration let in be known that it is preparing to slap tariffs on remaining Chinese imports. USD-JPY lifted back to the mid-to-upper 109.00s, up from the three-month low seen yesterday at 109.02. The biggest movers out of the main currencies have been AUD-JPY and NZD-JPY, crosses which are directionally sensitive to China-related sentiment swings. AUD-JPY has lifted back above 76.00 after yesterday printing a four-month low at 75.73. Elsewhere, EUR-USD has settled back in the lower 1.1200s after yesterday posting a two-week high at 1.1263. Regarding the U.S. and China situation, there is a thread of conjecture in market narratives that the two sides will eventually find a win-win solution, especially if higher tariffs have an increasingly evident impact on the two economies. Beijing had toughened its stance after seeing Trump's pressuring the Fed to loosen monetary policy as a sign of weakness.