Today’s key event risk: The US-Japan Trade Summit - TDS

Analysts at TD Securities provided a brief preview of today's key events risk, Japanese Prime Minister Shinzo Abe’s meeting with the US President Donald Trump, due later today. 

Key Quotes:

"It is unclear as to whether there will be a formal press conference between the two leaders, though the meeting is expected to carry over to the weekend. Several sources have reported that PM Abe intends to reveal a plan for greater Japanese investment in the US, but that discussion over a bilateral free trade agreement remain premature. We suspect any trade talk could revolve around LNG exports to Japan. Of particular interest will be if any discussion over FX policy emerges. Trump has already openly criticized Japan as actively suppressing their currency but we suspect Abe will defer and deflect any criticism of such so as to not derail JPY performance since the US election. Overall, we think the tone should be cordial so we think references to FX policy – if noted - will be benign and geared towards enhancing this special relationship through mutually beneficially means. If an announcement is made to expand direct investment into the US, we are biased to see USDJPY perform, though we would be careful in trying to extrapolate trends just yet until more clarity emerges on broader domestic US policy, particularly on tax reform. USDJPY has encroached towards short-term trend resistance around 113.70 established from the 3 Jan 2017 highs, and a break of this could put 115.00/50 back into view. Key support at 111.60."

The USD/JPY pair was last seen trading with strong gains at multi-day tops near 113.75-80 region.