The USDJPY is higher after the BOJ kept rates unchanged at 0.5% with two dissenters looking for a hike. BOJ Ueda said that there is no pre-set about timing of the next rate hike which assuaged the markets fear for higher rates sooner rather than later. Ueda also said Japan’s economy is recovering moderately but still showing some weakness, with easy monetary policy expected to support growth. He noted that economic expansion will likely remain modest due to trade-related slowdowns and weaker overseas demand but should improve as global economies stabilize. Ueda expects next year’s wage hikes to align with this year’s levels and emphasized the importance of closely monitoring wage negotiations, especially in the auto sector affected by tariffs. He added that consumer sentiment is improving, consumption remains solid.
The EURUSD and the GBPUSD are little change after up and down price action for those pairs. The ECB rate decision is ahead at 9:15 AM ET. In the video above, I take a look at the technicals that are driving the 3 major currency pairs.
Trump and Xi met with Trump posting that he had a “truly great meeting” with Chinese President Xi Jinping, emphasizing mutual respect and progress on key issues. In his Truth Social post, he”
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Claimed that many high-importance topics are close to being resolved between the U.S. and China.
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Announced that China will begin purchasing large amounts of American soybeans, sorghum, and other farm products, calling it great news for U.S. farmers.
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Stated that China agreed to continue cooperation on rare earths, critical minerals, and magnets, describing the talks as open and productive.
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Said China committed to helping stop the flow of fentanyl into the United States.
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Highlighted that China also agreed to start the process of purchasing American energy, including oil and gas from Alaska.
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Mentioned that U.S. energy officials Chris Wright and Gov. Doug Burgum will meet with Chinese counterparts to see if the deal can be finalized.
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Claimed the agreements will deliver prosperity and security to millions of Americans.
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Thanked several Asian countries — Malaysia, Japan, South Korea, Australia, Canada, New Zealand, Singapore, Thailand, and Vietnam — for their hospitality.
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Concluded by saying “Hundreds of billions of dollars are being brought into our country” and ending with “The best is yet to come!”
Chinese President Xi described China’s economy as resilient and vast—“like an ocean”—capable of withstanding all kinds of risks and challenges. He emphasized that China does not seek to challenge or replace any country, instead focusing on managing its own affairs responsibly. Xi said that dialogue is better than confrontation when addressing trade or global issues.
In his meeting with President Trump, Xi noted that China–U.S. relations remain stable and reaffirmed that Beijing has no intention of supplanting others. He stressed that trade and economic cooperation should serve as the foundation of the bilateral relationship. Both nations’ economic teams reportedly resolved several outstanding issues and agreed to strengthen collaboration in energy, trade, and artificial intelligence. Xi added that both sides should narrow their list of disputes and expand areas of cooperation, maintaining steady communication going forward.
U.S. Treasury Secretary Bessent said that President Trump and Chinese President Xi held constructive discussions focused on major bilateral issues in an atmosphere of mutual respect. Both leaders agreed to cooperate to combat the fentanyl crisis, with Trump committing to halve tariffs on Chinese goods in exchange for China’s efforts to curb the flow of precursor chemicals. The U.S. will also suspend new restrictions on technology exports and ease certain trade measures, while China will pause shipbuilding and rare earth licensing countermeasures. A TikTok transfer agreement was finalized in Kuala Lumpur, and Xi expressed interest in a U.S. pipeline project in Alaska. Bessent said signatures on the new China deal could come next week, and that Beijing will significantly increase farm imports, including 12 million metric tons of soybeans, as part of broader cooperation that could yield up to $12 trillion in new U.S. investments.
He added that Japan plans to reduce dependence on Russian energy over time and highlighted Trump’s strong rapport with Prime Minister Takaichi. On energy, Bessent said both nations are focused on nuclear power development, with the U.S. still behind China but working to close the gap. He also warned that the U.S. government shutdown is beginning to drag on the economy, costing an estimated $15 billion per week.
Finally, China’s Commerce Ministry confirmed that Beijing and Washington agreed to extend certain tariff exemptions and pause several trade-related measures for one year. The U.S. will continue suspending its 24% reciprocal tariffs for another year, while China will suspend shipbuilding-related measures against the U.S. for the same period. Both sides also reached a consensus on fentanyl cooperation and on expanding agricultural trade. Additionally, China pledged to handle TikTok-related issues appropriately and to pause countermeasures tied to the Section 301 investigation for a year.
US stocks are mixed. The Dow is implying a -149 point decline, the S&P is marginally lower by -1.4 points and the Nasdaq is now up marginally by 7.6 points. Meta is down -9% after earnings showing increasing AI costs. Microsoft is lower by about 2%.
The US yield are higher after moving higher after the FOMC rate cut yesterday. Powell said there was no pre-set course for rate action at the next meeting.
- 2 year yield 3.610%, +2.4 basis points
- 5 year yield 3.025%, +2.6 basis points
- 10 year yield 4.097% goalpost report 9 basis points
- 30 year yield 4.654%, +5.5 basis points.
Crude oil is trading down $0.35. Yesterday the inventory data showed a larger expected drawdown which up to raise prices but not by much.
Gold is trading up $52 or 1.3% at $3979.87. Bitcoin is trading down $589 at $109,448.
This article was written by Greg Michalowski at investinglive.com.