✅ U.S.–China Tensions Resurface, Risk-Off Mood Returns — Powell’s Speech in Focus for Dollar-Yen Direction

✅ U.S.–China Tensions Resurface, Risk-Off Mood Returns — Powell’s Speech in Focus for Dollar-Yen Direction

🌏 Renewed U.S.–China Friction Sparks Risk Aversion

The U.S. Trade Representative (USTR) announced the resumption of Section 301 investigations into China, prompting a sharp and defiant response from Beijing.
This reignited U.S.–China tensions, fueling risk-off sentiment across markets in the afternoon session.

Although President Trump sought to calm fears last week by saying that “relations with China are good” after hinting at additional tariffs,
Beijing’s retaliatory tone reignited investor concerns.
The flare-up in trade friction has revived global growth fears, keeping both equity and FX markets in a cautious, defensive mode.

💴 FX Market: Dollar-Yen Capped at 152 — Selling Pressure on Rallies

USD/JPY surged from the 147 range last week to above 152.50, but began the new week under selling pressure,
pulling back to the low 152s.
Support is seen around ¥151.10.

In London trading, the U.S. 10-year yield inched up from 4.01% to 4.06%, helping the dollar briefly regain the 152 handle.
However, upward momentum remains limited, with selling interest prevailing at higher levels.

• EUR/USD softened to the 1.1540s,

• GBP/USD slid to the 1.3250s after weak U.K. employment data.

🗣 Powell’s Speech at NABE Conference — Key Event Tonight

Fed Chair Jerome Powell is scheduled to speak at the National Association for Business Economics (NABE) annual conference,
addressing “Economic Outlook and Monetary Policy.”

With U.S. data releases halted amid the ongoing government shutdown,
markets now price in two rate cuts by year-end.
If Powell adopts a cautious or hawkish tone, the dollar could strengthen again,
while a dovish message might trigger renewed dollar selling.
His remarks are likely to set the near-term direction for the dollar.

💷 Weak U.K. Jobs Data Fuels Pound Selling

The latest U.K. employment report showed a rise in unemployment and an increase in jobless claims, both weaker than expected.
This pushed the pound lower against both the dollar and yen,
as expectations for a Bank of England rate cut later this year gradually increased.

💹 London Market Snapshot

✅ Summary

Renewed U.S.–China tensions have rattled markets and revived risk aversion.
While USD/JPY remains above 152, upside momentum has faded amid profit-taking and caution.
All eyes now turn to Fed Chair Powell’s speech,
which could define the dollar’s next directional move.
Markets in both London and New York are set to trade in “quiet tension” as traders await his remarks.