Safe-Haven JPY Rises As Trader's Remain Cautious

(RTTNews) - The safe haven Japanese yen strengthened against other major currencies in the pre-European session on Monday, as traders remain cautious amid renewed optimism about new trade deals after U.S. President Donald Trump indicated he does not think he will need to extend the July 9 deadline for countries to secure trade deals with the US. Trump also indicated the U.S. had signed an agreement with China.

A White House official later clarified that the U.S. and China have agreed to "an additional understanding of a framework to implement the Geneva agreement." Trump administration also expects to soon reach deals with ten major trading partners.

The Japanese Yen (JPY) traded higher amid rising bets of Federal Reserve (Fed) interest rate cuts. Also, traders are betting that the U.S. central bank will lower interest rates more often and maybe even sooner than they had thought.

On the other hand, the Bank of Japan's (BoJ) cautious approach to raising interest rates might hurt the JPY.

In economic news, data from the Ministry of Land, Infrastructure, Transport, and Tourism showed that Japan's housing starts decreased sharply for the second straight month in May. Housing starts slumped 34.4 percent year-on-year in May, faster than the 26.6 percent decline in April. Economists had expected a decrease of 15.0 percent.

Data also showed that construction orders received by the big 50 contractors grew 14.0 percent annually in May, after a 52.7 percent jump a month ago.

Data from the ministry of Economy, Trade and Industry showed that industrial production in Japan was up a seasonally adjusted 0.5 percent on month in May. That missed forecasts for an increase of 3.4 percent following the 1.1 percent decline in April.

On a yearly basis, industrial production was down 1.8 percent.

China's factory activity shrank for a third month in June amid weak demand while non-manufacturing activity increased in the month, data from the National Bureau of Statistics (NBS) revealed.

In June, China's NBS Manufacturing PMI went up to 49.7, and the Non-Manufacturing PMI went up to 50.5.

In the Asian trading today, the yen rose to a 5-day high of 197.49 against the pound and a 4-day high of 143.80 against the U.S. dollar, from early lows of 198.46 and 144.76, respectively. If the yen extends its uptrend, it is likely to find resistance around 195.00 against the pound and 142.00 against the greenback.

Against the euro, the Swiss franc and the NZ dollar, the yen edged up to 168.71, 180.20 and 87.40 from early lows of 169.62, 181.08 and 87.78, respectively. On the upside, the yen is seen around 166.00 against the euro, 175.00 against the franc and 85.00 against the kiwi.

Against the Australia and the Canadian dollars, the yen advanced to 4-day highs of 94.15 and 105.24 from early lows of 94.55 and 105.69, respectively. The yen is likely to find 91.00 against the aussie and 103.00 against the loonie.

Looking ahead, Eurozone money supply data for May and U.K. mortgage approvals for May are slated for release in the European session.

At 8:00 am ET, Destatis publishes Germany's flash consumer and harmonized prices for June. In May consumer price inflation steadied at 2.1 percent.

In the New York session, U.S. Chicago PMI for June and U.S. Dallas Fed manufacturing index for June are set to be published.