FX Action: USD-JPY finally punched above the early-December 109.72 high
FX Action: USD-JPY finally punched above the early-December 109.72 high, with the pair making an eight-month high at 109.92. EUR-JPY concurrently hit a two-week high, and AUD-JPY an 11-day peak. The new highs reflected an extension in yen underperformance amid a backdrop of rallying global equity markets. The MSCI Asia-Pacific index hit a new 19-month high today with investors anticipating Wednesday's signing of the U.S.-China phase-1 trade deal. The trade deal will be a major focus this week as the details haven't been made public. There are some doubts about whether China will stick to increased purchases of U.S. goods, though markets haven't been putting much stock in this. The trade issues aside, the real underpinnings of global asset markets have been persisting benign inflation and accommodation central banks. The MSCI all-country world index hit a record highs last week, and looks primed to made further records this week, assuming there aren't any negative surprises from the U.S.-China deal. China's Vice Premier Liu, head of Beijing's trade negotiation team, is travelling to Washington this week to sign the deal. The Trump administration has invited 200 dignitaries to the White House to witness the signing. Analysts are bullish of USD-JPY. The U.S. is enjoying what looks like a goldilocks economy -- growth slower, but still holding comfortably in positive expansion with inflation remaining benign -- while the risk-on vibe in global markets should maintain Japan's yield-hungry investors' confidence in foreign investments.