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Yen Gains as Tariffs Might Stay in Place

japanese yen

The Japanese yen gained ground on safe haven in flows and China’ yuan fell lower. Traders are digesting conflicting reports that U.S. tariffs will remain on Chinese goods until after the November Presidential election.

This is denting sentiment in the financial markets on Wednesday.

The first murmurs of tariffs possibly staying in place emerged on Tuesday. Today the initial phase one trade agreement is expected to be signed in the United States as senior trade officials from China are in Washington DC.

The United States will review, according to news reports, existing tariffs no sooner than ten months after this preliminary trade accord is signed.

Earlier this week, the U.S. Treasury Department removed Beijing from the currency manipulator list. This was seen a conciliatory gesture ahead of today’s trade deal ceremony.

After that news, sentiment improved which sent safe haven assets like the yen lower. Traders were also cheering the possible end of a contentious trade war which has dampened global economic growth.

The headline USD/JPY Forex market has inched lower to 110.20 yen. The Chinese yuan, offshore account, also fell against the dollar.

The USD/CHF currency exchange rate also fell after the Swiss franc gained. The United States, once again, has placed Switzerland on the currency manipulator watch list.

The Yen and Forex World Wait on the Trade Deal to be Signed Today

Today, China’s Vice Premier and chief trade negotiator Liu He is in Washington DC. He is expected to sign the preliminary trade accord with the United States. This will end the better than 15 month long trade war between the world’s two largest economies.

China is expected to purchase more U.S. agricultural good. China will also open their banking system and increase the level of enforcement with IP rights. China has also agreed to stop manipulating the yuan. In return, the U.S. will not go ahead with new tariffs, which would have gone into effect today, and will slash existing tariffs in phases.

About David Frank

David has his MA and PhD in Economics. He is a technical analyst who has been trading in the Forex world for over a decade. As an analyst and trader, David believes in the big picture by blending together technical analysis with the fundamentals behind the scenes in the Forex and Bond markets. David’s trading strategy is unique. He blends an understanding of fundamental and macroeconomics with technical analysis to offer a unique view into Forex. He applies several strategies including carry long positions, to take advantage of high yields in non-volatile markets, as well as using quicker, chart related analysis for day trading.

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