The US and Japan Reach a Limited Trade Deal

The US and Japan have just struck a limited trade deal. As the first phase of a more extensive agreement, it opens the Japanese market for US agriculture products worth of 7 billion USD.

Japan will also reduce or remove tariff on products such as beef, pork, corn and wine. Japanese Prime Minister Shinzo Abe mentioned that the new agreement with US covers industry, agriculture and digital trade. The office of US Trade Representative(USTR) said that both sides have reached consensus over the outcomes of earlier market-access negotiations on agriculture, industry and digital trade. But the new agreement faces more complexity as Trump might post tariff on Japanese automobiles.

Automobile industry is Japan‘s largest exportation sector. In 2018, Japan exported US$51 billion worth of cars to the US as its 4th largest trade partner. The latest agreement between the US and Japan reduces Japanese Yen’s risk of declining to some extent.

Technically, USD/JPY exchange rate jitters around the 20 period moving average(MA), indicating a long-short equilibrium on the market. In the future the currency pair is estimated to oscillate in the range of 107-109.

USD/JPY Key Range:107.56-107.92

S1: 107.20 R1: 108.43

S2: 106.47 R2: 108.91