What's the message here?
Stocks are at a record and USD/JPY has completely unwound the drop that started on July 31.
What happened that day? That was when Trump shocked markets with a fresh round of tariffs on China. Since then the Fed has cut a couple times and is expected to cut again on Wednesday.
What does it all tell us? It's that a Phase One trade deal is now fully priced in. Additionally, the market doesn't believe that any more tariffs are coming through the election. Essentially, we have reached a ceasefire in the trade war.
The next hurdle is the July 31 high of 109.32. To get back to 112.00, the market will need to be convinced that Fed cuts are off the table and that the economy is turning higher.
