USD/JPY Rally Stops Short of 50-dma

JPY traded poorly throughout the Tuesday session, prompting new multi-week highs in USD/JPY as equities persistently pushed higher. New alltime highs were hit in US S&P futures ahead of the NY open, although prices moderated throughout US hours. This was mirrored in USD/JPY, which stopped short of breaking above the Y106.58 50-dma, which remains first resistance. Markets read positively into the meeting of Chinese and US negotiators, as both sides re-committed to the phase one trade deal struck in January.

GBP, CHF outperformed, but recent ranges were respected as both currencies recovered from losses posted at the tail-end of last week.

The greenback was mixed-to-lower, but generally muted newflow and volumes contained prices well as the USD index remains short of the early August highs. Reflecting the minimal moves in spot prices, implied vols in the front-end inched lower for most DM, EM FX.

Focus Wednesday turns to prelim US durable goods data for July, as well as Mexican GDP and South African CPI figures. ECB's Kazimir & Schnabel, BoC's Wilkins, Fed's Barkin and BoE's Haldane are all due to speak.