USD/JPY has posted small gains in the Wednesday session. In North American trade, USD/JPY is trading at 107.15, up 0.13% on the day. On the release front, there are no key US events. The markets will be listening to speeches from FOMC members John Williams and Randal Quarles. On Thursday, the US releases unemployment claims and the Philly Fed Manufacturing Index. Japan will release National Core CPI.
The recent trade battle between the US and China has been overshadowed by events in Syria, but the threat of further tariffs between the world’s largest two economies could again roil the markets and in turn, send gold prices higher. Another salvo was fired on Tuesday, as China slapped a tariff of some 179% on US sorghum crops, which is a livestock feed. China imports about $1 billion of sorghum annually, and the tariff, if it remains in place, will essentially halt US exports of sorghum to China. The Chinese government has threatened to impose tariffs on US soybean exports, valued at some $12 billion each year. If the US opts to retaliate, the specter of an ugly trade war between the US and China could spook investors and boost the safe-haven Japanese currency.
With the huge fluctuations that Bitcoin has exhibited in recent months, there has been plenty of press about cryptocurrencies. The proliferation of cryptocurrencies has led to discussions about central bank-issued digital currencies (CBDC), and their effect on the global financial scene. At a banking conference earlier this week, BoJ Deputy Governor Masayoshi Amamiya said that CBDC would have a negative impact on the current financial system, but added that cryptocurrencies could find a role with central banks, such as in payment and settlement transactions. Currently, the BoJ and ECB are involved in a joint initiative, Project Stella, which is examining the use of Blockchain in securities transactions.