Daily Market Insight

The USDJPY continues to be an interesting pair to watch as the session is very much correlated to global equity markets. The USDJPY stalled at the 100 hour MA at 112.45, traders seem content to lean against this level for now and the pair bounced to 112.83. The pair will have to break higher than 112.90 for those traders to be comfortable in their position – this will be a make or break level.
There was a bit of a mixed bag out of the US in terms of news flow, and it seems as though the market may have begun its walk down the green mile waiting for the NFP today. This was a week where the Fed indicated that they would let the inflation target over run its 2% ceiling and todays data will give us a little insight to that. The EURUSD recovered somewhat yesterday towards the end of the session with trend line support at 1.1935 offering some resistance
Yesterday was very much like watching grass grow with not much happening, there was no data to move the market and so it was pretty directionless. The only real geopolitical event of the day was news that China had blocked a Canadian shipment of agricultural products – the reason at this point is unknown.
The morning session concentrated on the fall out between the US and China in their quest to get a trade deal completed – this seemed to be a recent certainty until Sunday changed that quiet abruptly. More news is starting to filter in that the Chinese had backtracked on almost all their commitments in the trade deal – IP theft, technology transfer, competition and currency manipulation – this is what prompted Trumps tweets.
Today we have the FOMC meeting, this is always an eagerly anticipated event. The consensus is that there will be no change but that the language will target a rate increase in both September and December. Apple earnings were also on the agenda last night with the stock up over 2.5% on the day, we are coming to the end of earnings season soon and we are now coming to an end in this regard. 
Trade war headlines continue to dominate the market and creates a choppy environment, the PBOC was the catalyst for the reversal in recent dollar strength with the commitment that the Yuan would not be used in any trade disputes. The New York session gradually dwindled yesterday as liquidity dried up ahead of the bank holiday, UK desks also seemed to leave early – no doubt to prepare for the world cup knockout match.
The market is still a little jittery ahead of possible tariffs increases later today, this looks as though it is going to be the story that dominates the market leading into Monday. Although China have made their way to Washington they have promised to retaliate to any tariff hikes and upped it a notch by firmly opposing sanctions against Iran.I am not sure how this got to this point but it does seem to me that China possibly backtracked from all reforms, it would seem as though they are not ready for a trade deal and dare I say it – Trump has done the right thing? The market will be waiting on the Chinese response today but with bilateral trade between the two countries, I would expect their retaliation would be limited.Either way, the market will feed off headlines today and this could sway risk sentiment.
I have been most interested in the USDJPY, technically it seems the most sound trade – unfortunately it is also correlated to the equity markets. the big mover yesterday was the USDCAD, the BOC did raise rates as expected but this was largely priced in and so the move lower to 1.3065 was very much short lived, the committee was rather dovish going forward and with oil under the pressure – loonie traders were forced to cover and by the end of the day the pair was trading at 1.3210. I would be very interested in trading this pair later on in the week.