Risk-on: Safe-Haven currencies, Brent crude Oil and Equities make the most significant move overnight as the USRT delays China tariffs for certain products until December 15 which is positive for risk sentiment and global growth as well (September-December).

Products:  Products in this group include, for example, cell phones, laptop computers, video game consoles, certain toys, computer monitors, and certain items of footwear and clothing, according to the USTR official press release.

The market sentiment has been improved with JPY crosses rallied between 0.60%-2.25%. Flipside safe bets like Gold down 0.60%.

As the U.S. Delays tariffs, the USD will outperform. Flipside, the safe-haven currencies CHF and JPY will underperform in the coming days. US-China trade war has a direct impact on AUDJPY and USDJPY along with CHFJPY. We think these two crosses (AUDJPY and USDJPY) at an inflection point underpinned by the delay tariffs. Will the rally last -long is the crucial question? We sense that current positive sentiment is not a permanent game-changer unless we get a clear picture of the trade war.

We expect a weaker JPY against AUD, CHF, EUR, and USD. Overnight yields were sharply higher with 10-year Treasury yields closed +2bps to 1.68, and 2-year closed +8bps to 1.66. The combination of improving sentiment and rebounding UST are the negative factors for CHF and JPY currencies.

Petr Krpata at ING said, “JPY to underperform EUR and CHF with the latter two currencies both exhibiting lower correlation with risk.” Also said “Stronger USD vs. low yielders, weaker USD vs. high yielders.”

JPY insights:

  • AUDJPY and EURJPY may have formed a double bottom pattern.
  • USDJPY wiped-out five-day losses from overnight strength and saw the biggest single-day rally in the past one year.
  • EURCHF’s past seven-days trading pattern indicating the cross has been trying to find support via a double bottom pattern

JPY insights: Near-term trend is supportive but the market needs to take out the key resistance levels.

It is important to always keep in mind the risks involved in trading with leveraged instruments.

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