FX Update: The yen has firmed up
FX Update: The yen has firmed up amid trimming of risk-on positioning in global markets after U.S. Treasury Secretary Mnuchin said late yesterday that tariffs on Chinese goods would remain in place until the completion of the second phase of the U.S.-China trade agreement. The U.S. government was also reported to be near publication of a rule that would increase its ability to block shipments of foreign-made goods to China’s Huawei. These developments, which have overshadowed the PBoC's extension of short- and medium-term loans today, saw stock markets retreat and safe-haven premiums richen. MSCI Asia-Pacific index retreated from the 19-month high seen yesterday, while USD-JPY posted a two-day low at 109.81. AUD-JPY, widely viewed as a forex proxy on China, also ebbed to two-day lows. The dollar, meanwhile, has been trading with a mixed-to-softer bias following yesterday's sub-forecast CPI data out of the U.S (analysts are expecting an up-tick in inflation in the months ahead as the sharp drop in commodity prices last winter will provide a jump in y/y comparisons). EUR-USD, still remaining in an overall low-volatility low-range stasis, settled near 1.1130 after lifting out of yesterday's low at 1.1104. Cable edged out a two-day high at 1.3042. AUD-USD remained within its Tuesday range, as did USD-CAD, holding below the six-day high seen at 1.3079. Oil prices posted fresh lows in the wake of Mnuchin's remarks. Front-month WTI futures hit a six-week low at $57.72 before finding a foothold.