JGBs sag on hopes of U.S.-China trade talks; ECB and BoE monetary policy decision in focus

Japanese government bond prices sagged slightly on Thursday on hopes of trade talk revival between the U.S. and China. However, today markets would eye the European Central Bank and Bank of England monetary policy decision.

The yield on the benchmark 10-year JGB note, which moves inversely to its price, rose about 1/2 basis point to 0.112 percent, the yield on the long-term 30-year note also climbed 1/2 basis point to 0.842 percent and the yield on short-term 2-year traded nearly flat at -0.108 percent by 05:00 GMT.

There were hopes of trade tensions thawing on news that the world’s two biggest economies were preparing for the next round of trade talks. The US and Canada are also due for more negotiations on NAFTA.

“Overall risk sentiment was aided on several fronts, perhaps most importantly over the prospects of renewed US-Sino trade talks,” wrote Emmanuel Ng, Treasury Research & Strategy at OCBC Bank.

However, the market would watch monetary policy decision from the ECB and BoE closely today, where both the central banks are expected to hold their stance and keep the benchmark interest rates unchanged.

“Asian markets are likely to trade in a range today, with investors keeping an eye on the ECB and BOE policy meetings - ECB president Draghi’s press conference may reiterate its message of ending its asset purchases by end-18 but tweak its growth forecasts lower (mainly due to the drag from UK and Turkey) and keep its inflation forecasts largely unchanged,” noted OCBC Bank.

Meanwhile, the Nikkei 225 index traded 0.90 percent higher at 22,814 by 05:10 GMT, while at 04:00GMT, the FxWirePro's Hourly JPY Strength Index remained neutral at -27.78 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex