G-7 meeting and other events may lead to a risk-off environment in coming days, short USD/JPY?
 
Investors’ attention towards the trade issue is heightening ahead of G-7 summit as chances are the financial markets will lean toward risk aversion if Trump makes any negative comments.
 
-       Dollar-yen options show traders may be underestimating the downside potential for the near term and the prospects of heightened risk-aversion. All that may change with the spate of key global events in coming days.
 
-       One-month risk reversals in the USD/JPY spot is still relatively cheap compared to levels seen last month during Italy’s political crisis. This suggests that there are limited demands to protect against declines in dollar-yen.
 
-       Over the next seven days, US will face off its trading partners at the Group-of-Seven summit. President Donald Trump is due to meet North Korea’s Kim Jong Un, central banks of America, Europe, and Japan to decide on monetary policies.
 
-       Based on technical, the spot pair has breached the initial resistance around 110.00 but failed to push through resistance at 111.40 which is 21st May 2018 high.

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