ForexLive Asia-Pacific FX news wrap: Off ramp emerging for tariffs? S&P 500 futures jump

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• U.S. Vice President Vance: Russia’s war in Ukraine is not going to end any time soon
• “Japan’s US Treasury holdings among tools for trade talks, Finance Minister Kato says”
• Japan fin min Kato said had no discussion at all with US of where yen FX level should be
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• Trade ideas thread – Friday, 2 May, insightful charts, technical analysis, ideas

Hopes
for a thaw in US-China trade tensions gained momentum Friday after
Beijing confirmed that Washington had recently conveyed, repeatedly, a desire to
start negotiations. “The US has recently sent messages to China
through relevant parties, hoping to start talks,” China’s
Commerce Ministry said, adding that “China is currently evaluating
this.” The ministry noted that the US has repeatedly expressed
interest in addressing tariff issues. Markets took the signals as a
tentative step toward dialogue, with oil prices and US equity index
futures moving higher on optimism that the world’s two largest
economies might be preparing to re-engage. In Washington, Senator
Marco Rubio echoed the sentiment, saying “the Chinese want to meet
and talk,” suggesting the ice may finally be starting to break.
Investors broadly interpreted the tone shift as a potentially
face-saving off-ramp for Trump, and a developing path forward for
China, particularly as economic cracks begin to emerge more visibly
in the recent data on both sides of the Pacific.

Still,
Beijing’s tone was far from conciliatory. China’s Commerce Ministry
stressed that “if the US does not correct its unilateral tariff
measures, it has no sincerity at all” and that Washington must be
“prepared to take action in correcting erroneous practices,
including cancelling unilateral tariffs.” While China confirmed it
is open to dialogue, officials made clear that any talks would be
conditional on tangible US concessions. These statements, some
analysts argue, amount to Beijing effectively demanding a full
rollback of Trump-era tariffs as a precondition for serious
engagement — a stance that could complicate efforts to rekindle
negotiations.

Earlier
in the session, Japanese Finance Minister Katsunobu Kato made
headlines by suggesting that Japan’s substantial holdings of U.S.
Treasuries could be considered a potential bargaining chip in trade
negotiations with Washington — though he was quick to clarify that
there is no intention to deploy that option at this stage. Japan’s
lead negotiator on tariffs, Ryosei Akazawa, struck a more measured
tone, and notably indicating that the next round of talks may not take place
until after mid-May — a sign that a breakthrough is unlikely
anytime soon. Both officials confirmed that foreign exchange issues,
i.e. the yen, were not discussed. Later, Prime Minister Fumio
Ishiba reinforced Japan’s longstanding position, stating that
Tokyo, like Beijing, continues to urge the U.S. to remove its tariff
measures.

Australia
heads to the polls on Saturday, May 3, with Prime Minister Anthony
Albanese still favoured to retain government — though polling
remains tight, and the prospect of a minority government cannot be
ruled out. On the economic front, March retail sales data released today showed a modest
improvement from February but fell short of expectations, while Q1
retail sales were flat overall — a notably weak result. Meanwhile,
producer price inflation (PPI) for the quarter came in above headline
CPI, highlighting lingering cost pressures. However, none of the data
releases shifted market expectations for a 25 basis point rate cut
from the Reserve Bank of Australia when it meets on May 19–20..

As mentioned, oil
and equities were broadly underpinned amid easing US-China tensions,
while major currency pairs saw mixed performance. USD/JPY briefly
spiked toward 145.80 but later retraced, ending the session little
changed. Elsewhere, the US dollar weakened against most G10 peers,
with the AUD, GBP, NZD, and CAD all posting gains. EUR/USD was a
relative laggard, advancing more modestly compared to the broader
move.

After a gap lower to open Globex evening trade ES soared on the China news.

The above is a CFD that tracks ES.

This article was written by Eamonn Sheridan at www.forexlive.com.