USD/JPY's rebound as global stocks attempt to stabilize appears dubious since the U.S. and China show no signs of moving closer to trade agreement, an issue which is hanging over the global economy.
The U.S. and China appear unwilling to take preliminary negotiating steps that would set the stage for a Trump-Xi meeting at November's G-20 meeting .
The big risk is that no progress will be made by year-end, and the U.S. will then put tariffs on the rest of Chinese exports and lift the rate across-the-board to 25 percent from 10 percent.
That would intensify global derisking, lift U.S. import costs and force Chinese officials to either let USD/CNY rise above the pivotal 7 level or to sell more U.S. Treasuries as part of a capital flight defense nL3N1X543Y.
USD/JPY rallies toward 113 are a sell with a tight stop above the 113.09 kijun. The hefty IMM net long would be forced to sell if October's low, key Fibo, 100-DMA and cloud twist support at 111.48-63 give way to signal a retest of August's 109.78 low.